KMD Brands (KMD) H1 2025 earnings summary

Executive summary

• Group sales rose 0.5% year-over-year to $470.9 million for 1H FY25, driven by improved direct-to-consumer (DTC) and online sales across all brands, while wholesale recovery remains slow.

• Underlying EBITDA dropped 74.3% year-over-year to $3.9 million, and statutory net loss after tax was $20.7 million; underlying NPAT loss was $16.1 million.

• No interim dividend declared due to operating performance; dividend policy remains a 50–70% payout of underlying NPAT when earnings permit.

• Net debt reduced by $20.0 million year-over-year to $76.2 million, with net working capital down $33.6 million due to lower inventory.

• Focus remains on stabilizing sales, growing gross margin, simplifying business, reducing working capital, and returning to dividends.

Financial highlights

• Gross margin was 58.5%, down 0.3 percentage points year-over-year, reflecting increased promotional activity and inventory clearance.

• Underlying operating expenses increased 4.2% year-over-year to $271.6 million, partly due to investments in brand development and new stores.

• Net working capital decreased by $33.6 million year-over-year to $192.6 million; net debt fell by $20.0 million to $76.2 million.

• Adjusted operating cash flow was negative $0.8 million, with capital expenditure of $14.1 million in 1H FY25.

• Basic earnings per share was a loss of 3.0 cps, compared to a loss of 1.5 cps in the prior period.

Outlook and guidance

• DTC sales growth continues for all brands, but wholesale recovery is expected to be gradual.

• Short-term gross margin pressure anticipated due to competitive market and promotional intensity; medium-term focus on margin improvement.

• Monitoring geopolitical risks and supply chain impacts; focus on sales growth, profitability, cash flow, and inventory reduction.

• Management transition underway, with new Group CEO Brent Scrimshaw and new Rip Curl CEO appointed.