Key Takeaways:
- KMD Brands’ board is weighing a handful of unsolicited, nonbinding approaches from outside parties after a strategic review that also produced decisions on Ozmosis and the company’s Southeast Asian manufacturing site.
- Rip Curl returned its North American business to profit in fiscal 2026, with company optimism building ahead of a product reset about to hit stores.
- KMD Brands is forecasting further sales growth in fiscal 2027 across Rip Curl, Kathmandu and Oboz, even as its multi-brand retail chain remains under pressure.
KMD Brands Limited’s board is weighing several unsolicited proposals from outside parties interested in the business, the company said alongside its fiscal 2026 earnings, as it also reported improved sales and profitability across Rip Curl, Kathmandu and Oboz for the year ended July 26.
The proposals follow a broad review of the business that KMD Brands launched in May, which the company said was carried out without a predetermined outcome.
Review Leads to Manufacturing Sale and Ozmosis Decision
That review led to two firm decisions: to sell the company’s wetsuit manufacturing facility in Southeast Asia, with a phased wind down of production over the next 12 months and production scaling up at a third-party facility, and to keep Ozmosis, the multi-brand Australian retail chain Rip Curl has owned since 2011, after testing outside interest in it.
No proposal for Ozmosis offered more value than continuing to streamline the chain and improve profitability of its remaining stores, the company said. The review also led to a commitment to further cost cuts through offshoring some group shared services.
Beyond those two decisions, the board said it’s reviewing several proposals from outside parties and plans to keep talking with a handful of them.
“The approaches are indicative, nonbinding and incomplete and no decision has been made, and there is no certainty that any proposal or transaction will result,” Group CEO Brent Scrimshaw said on the company’s Sept. 22 earnings call.
Asked whether a Rip Curl sale would go to shareholders before any decision, Scrimshaw said the board has an obligation to consult investors before any such move and would do so if it determines an offer represents fair value.
Group Sales and Margin Improve Despite Impairment Charge
Group sales rose 6.5% to NZ$1.053 billion (US$613.9 million) in fiscal 2026, or 1.7% on a constant currency basis, with growth in both wholesale and direct-to-consumer channels.
Gross margin expanded to 57.7% of sales from 56.5% a year earlier.
KMD Brands reported an underlying net loss of NZ$9 million (US$5.2 million), narrowed from a NZ$28.3 million (US$16.5 million) loss in fiscal 2025.
On a statutory basis, the company reported a net loss of NZ$414.4 million (US$241.6 million), which included a NZ$463 million (US$269.9 million) impairment charge against goodwill and brand assets across all three brands.
Rip Curl Wholesale and Online Sales Climb
Rip Curl sales rose 3.8% year over year to NZ$571.2 million (US$333 million), aided by currency movements used to convert global sales into the company’s New Zealand dollar reporting currency. On a constant currency basis, sales fell 1.2%.
Wholesale sales increased 5.5%, with particularly strong demand in Europe, while online sales grew 9.1% to NZ$45.5 million (US$26.5 million), or 13.3% of direct-to-consumer sales.
Direct-to-consumer sales at Rip Curl branded stores, excluding Ozmosis, rose 5.4%, with U.S. retail and European summer trading among the highlights. Gross margin at Rip Curl expanded 110 basis points on favorable channel mix and stronger exchange rates.
North American Business Returns to Profit
Rip Curl’s North American business returned to profitability in the year, following a resizing of operations and a rebalancing of its footprint between the mainland and Hawaii.
New Search Series and Wetsuit Launch Follow Product Reset
The brand relocated its global product creation teams to its head office in Torquay, Australia, during the year, and reset its entire product line plan, cutting more than 2,000 SKUs compared with fiscal 2025.
“The result is really just coming to market now,” Scrimshaw said, referring to the brand’s new Search Series collection, which launched a few weeks before the earnings call with what the company described as encouraging early sell through.
Rip Curl also plans to launch what the company called its biggest wetsuit innovation in 25 years next month, ahead of the Southern Hemisphere summer.
Ozmosis Weighs on an Otherwise Improving Store Fleet
Same store sales at Rip Curl branded stores, excluding Ozmosis, rose 1.3% for the year, while Ozmosis same store sales fell 5%.
The company closed 11 Rip Curl stores and opened five during the year, ending fiscal 2026 with 166 owned Rip Curl stores.
For the first seven weeks of fiscal 2027, Rip Curl brand stores were up 4% year over year on a constant currency basis, while Ozmosis multi-brand stores were down 12.1%, which the company attributed to product assortment challenges.
A remediation plan for Ozmosis includes the closure of five underperforming stores in fiscal 2027.
“Rip Curl brand stores grew across multiple geographies and online, while Ozmosis multi-brand stores experienced some difficult trading conditions due to some product assortment challenges,” Scrimshaw said on the call.
Kathmandu Returns to Profit on Strong Australia and New Zealand Demand
Kathmandu sales rose 11.1% to NZ$402.3 million (US$234.5 million) despite a net reduction of four stores, with strong momentum in both Australia and New Zealand. On a same store basis, meaning stores open in both years, Kathmandu sales, including online, rose 8.2%.
The brand returned to positive underlying earnings for the year after a loss in fiscal 2025, helped by the return of its XT Series product line and a shift to a distributor-led international business model.
Oboz Gains on New Product and Shopify Migration
Oboz sales rose 3.8% to NZ$79.5 million (US$46.3 million), supported by new product introductions and online sales growth of 11.8% following the brand’s move onto the group’s Shopify platform.
Oboz returned to positive underlying earnings in the year, aided in part by tariff refunds.
KMD Outlook
KMD Brands forecast group sales of NZ$1.055 billion (US$615.1 million) to NZ$1.075 billion (US$626.7 million) for fiscal 2027.
The company said Rip Curl sales should benefit in the first half from initial deliveries of its next generation product ahead of the Australian peak trading season, while Kathmandu is expected to sustain its sales momentum. Rip Curl and Oboz’s combined wholesale order book was described as consistent with the prior year.
