Rip Curl parent KMD Brands announced Rip Curl’s sales dropped in the first half of the fiscal year on weak consumer spending and wholesale challenges as retailers reduced inventory levels.
In its preliminary results announcement, KMD said Rip Curl’s revenue was down 9.2% for the first half of the fiscal year ended Jan. 31 compared to the prior-year period. Rip Curl was up against a tough comparison – revenue during the same period last year rose 18.8%.
Overall KMD sales are expected to be about NZ$469 million ($289.4 million) for the first half of FY 2024, down 14.5% compared to the prior-year period.
“It has been a challenging start to the year, as consumer sentiment continued to weaken,” said Michael Daly, KMD CEO and managing director, in a news release. “Rip Curl and Oboz are cycling record sales last financial year, and while revenues from the direct-to-consumer channel for these brands are showing single digit declines (-4.4%), the wholesale channel has been more challenging (-16.8%) as wholesale accounts reduce inventory holdings.”
Outdoor footwear brand Oboz dropped 20% compared to last year. Oboz also had a tough comparison – sales jumped 124.3% last year.
KMD’s Kathmandu brand posted a revenue decline of 21.5% for the six-month period compared to a 51.2% increase at the same time last year.
“The Kathmandu brand has experienced softer trading results since June 2023,” Daly said. “A combination of weaker consumer sentiment, the warmest winter on record in Australia and the brand’s reliance on winter-weight product has resulted in a disappointing first half.”
The company said operating costs are NZ$16 million ($9.8 million) below last year, despite ongoing inflation headwinds. “All brands continue to actively manage costs in a challenging consumer environment,” the company said in a release.
EBITDA for the first half of fiscal year 2024 is estimated at NZ$14 million to NZ$16 million ($8.63 million to $9.87 million).
Looking ahead, KMD expects the wholesale inventory reduction cycle to end this fiscal year “giving us a more positive FY25 outlook in the wholesale channel,” as the company launches new products and takes other steps, Daly said.
