Key Highlights

  • Group sales for the 12 months to 31 July 2026 rose 6.5 per cent to NZ$1,053.0 million, and underlying EBITDA climbed 137.7 per cent to NZ$42.0 million.
  • The headline statutory figure tells a different story.
  • A one-off, non-cash Impairment expense of NZ$462.7 million (NZ$394 million after tax) resulted in a statutory net loss after tax of NZ$414.4 million.
  • Alongside the result, the company concluded its Business review and said the board will continue discussions with a limited number of parties that have made indicative approaches.

KMD Brands Limited (ASX:KMD), the owner of Kathmandu, Rip Curl and Oboz, has reported its FY26 result, showing sales growth across all three brands and a sharp lift in underlying Earnings in the first year of its Next Level turnaround strategy. Group sales for the 12 months to 31 July 2026 rose 6.5 per cent to NZ$1,053.0 million, and underlying EBITDA climbed 137.7 per cent to NZ$42.0 million.

The headline statutory figure tells a different story. A one-off, non-cash impairment expense of NZ$462.7 million (NZ$394 million after tax) resulted in a statutory net loss after tax of NZ$414.4 million. No final Dividend was declared. Alongside the result, the company concluded its business review and said the board will continue discussions with a limited number of parties that have made indicative approaches.

FY26 by the numbers

All figures are in New Zealand dollars, KMD's reporting currency. Compared with FY25, the company reported:

Sales up 6.5 per cent to $1,053.0 million, or up 1.7 per cent on a constant currency basis

Gross Margin up 1.2 percentage points to 57.7 per cent

Underlying operating expenses up 4.4 per cent to $565.2 million, though down 0.2 per cent in constant currency

Underlying EBITDA of $42.0 million, up from $17.7 million

Underlying EBIT of $7.5 million, compared with a loss of $18.0 million

Underlying net loss after tax of $9.0 million, narrowed from a loss of $28.3 million

Statutory net loss after tax of $414.4 million, compared with a loss of $93.6 million

Net Debt of $48.1 million, down $4.7 million

KMD said the gross margin improvement reflected channel and product mix, better sourcing and favourable input-cost exchange rates, and included $8 million of Tariff refunds. The impairment covered Goodwill and Brand Assets across the group and was excluded from underlying results. The company said it does not affect day-to-day operations.

How each brand performed

KMD Brands is headquartered in Christchurch, where Kathmandu was founded in 1987, and is dual-listed on the NZX and ASX. The group bought Oboz in 2018 and acquired Rip Curl in 2019 for A$350 million, before Kathmandu Holdings was renamed KMD Brands in 2022.

Kathmandu led the way. Sales rose 11.1 per cent to $402.3 million despite trading from four fewer stores, and same store sales including online grew 8.2 per cent. Underlying EBIT improved to $1.1 million from a loss of $19.6 million. Sales grew 4.3 per cent in Australia and 11.7 per cent in New Zealand, with online sales up 9.6 per cent to $57.1 million.

Rip Curl lifted sales 3.8 per cent to $571.2 million, helped by Exchange Rate movements. On a constant currency basis its sales fell 1.2 per cent. Underlying EBITDA rose 12.2 per cent to $34.4 million and EBIT was up 7.9 per cent to $15.4 million. Rip Curl brand store sales were up 5.4 per cent, but same store sales at Ozmosis, its multi-brand Australian retail chain, fell 5.0 per cent.

Oboz, the US hiking footwear brand, grew sales 3.8 per cent to $79.5 million, and underlying EBIT improved to $2.0 million from a loss of $4.2 million. Its gross margin rose 7.3 percentage points, including one-time tariff refunds of $4.3 million.

Balance sheet and funding

KMD completed a $65.5 million Equity raising in April 2026, generating $61.9 million after costs. Net debt fell to $48.1 million, although Working Capital phasing absorbed much of the benefit. Net working capital rose $38.7 million to $196.4 million, largely because of changed payment timing with key suppliers. Inventory declined for the fourth consecutive year, and the Leverage Ratio improved to 1.2 times from 3.3 times.

The group said it complied with all bank covenants at 31 July 2026. After year-end, its syndicated Facility was increased to NZ$205.2 million. Statutory Operating Cash Flow fell to $66.8 million from $126.2 million.

Business review and indicative approaches

The review, launched in May 2026 with advice from Deloitte, Barclay & Co and Chapman Tripp, led to a decision to divest the group's Manufacturing facility in Southeast Asia and to offshore selected shared services. KMD also tested external interest in Ozmosis but said no proposal offered greater value than continuing to rationalise the chain.

Importantly, the board said it had received a number of indicative approaches from external parties and would engage further with a limited number of them. The company stressed that the approaches are indicative, non-binding and incomplete, that no decision has been made, and that there is no certainty any transaction will result.

Group Chairman Philip Bowman said: "These discussions remain preliminary in nature and there is no certainty that any proposal will lead to a transaction."

What management said

Group CEO and Managing Director Brent Scrimshaw said: "FY26 was a year of significant change for KMD Brands as we executed the first year of our Next Level strategy. The actions taken through Next Level are translating into improved financial performance."

He added: "While there is more work to do, we enter FY27 with clear priorities and growing momentum."

FY27 guidance and trading

KMD issued FY27 guidance for Revenue of NZ$1,055 million to NZ$1,075 million, underlying EBITDA of NZ$52 million to NZ$55 million, and Capital Expenditure of NZ$15 million to NZ$16 million. The guidance assumes no adverse change in operating conditions, including economic headwinds and currency movements, and includes about $6 million of short-term management incentives. The company is targeting a further $10 million of annualised cost savings.

In the first seven weeks of FY27, constant currency same store sales rose 7.4 per cent at Kathmandu and 1.0 per cent at Rip Curl, where brand stores grew 4.0 per cent but Ozmosis fell 12.1 per cent. KMD plans to close five underperforming Ozmosis stores.

For investors in ASX retail shares, the key considerations include the uncertain outcome of the indicative approaches, exposure to exchange rates and discretionary spending, and whether Rip Curl and Ozmosis can improve on a constant currency basis.

The bottom line

KMD Brands' FY26 result shows a business with improving underlying earnings and sales growth in all three brands, offset by a very large non-cash impairment and no dividend. FY27 guidance points to further EBITDA growth, while the board's talks with interested parties add a new element for shareholders to monitor.