Kathmandu Holding Limited (ASX:KMD) has reported a loss in their first half results. The retailer, which operates 157 outdoor clothing and equipment shops, is reducing the number of new store openings due to the drop in revenue. The company reported a loss of $1.8m from an $11.8m profit. Although sales rose 7 per cent to $179.4m, costs increased by 18 per cent to $99.5m. The company says that costs matched their projections but that sales were below expectations. The company attributes the drop in sales to the significant discounts they’ve been offering. “The first half of our 2015 financial year delivered a disappointing result," said acting chief executive Mark Todd. "The aggressive quitting of excess stock in August and September drove top line sales but at significantly reduced gross margins. Most importantly, our Christmas sale and trading through January did not produce the sales we expected.”
Shares of KMD are down 20c, or 12.74 per cent, at $1.37 per share with less than one hour of trading hours left in the day. Like many other Australian retailers, Kathmandu has been struggling with spending decreases in the economy. Mr. Todd cited “soft” sales in Australia due to the “generally weaker discretionary spend environment.” The one-year return for KMD is down 60.44 per cent. KMD is down 32.43 per cent so far this year. Despite the retail slump in Australia, Kathmandu expects to open 11 new stores by the end of July. “"We continue to lay the foundations for future growth at Kathmandu," Mr. Todd said. "We remain confident that we can succeed in developing meaningful sales in international markets."