The company behind Kathmandu, Rip Curl and Oboz is getting out of manufacturing. In a trading update filed with the NZX on Wednesday morning, KMD Brands confirmed it will sell its South East Asian manufacturing facility and wind production down over the next 12 months, a decision that ends nearly three decades of Rip Curl making its own wetsuits in Thailand.
The numbers attached to the sale are modest by the standards of a company turning over more than a billion dollars a year. KMD expects net proceeds from the property of between $5 million and $7 million, plus roughly $6 million of working capital freed up once it stops holding stock and materials tied to the plant. Together that is a little over $10 million heading back onto a balance sheet that has been the group’s weak point for two years.
What makes the move interesting is not the cash. It is what it says about where KMD thinks its problems are. The factory is a certified B Corp site that Rip Curl has run for about 28 years, and vertical manufacturing has long been part of how the surf brand described itself. Owning the plant meant controlling neoprene quality and turnaround times on a product that is genuinely hard to make well. Selling it means KMD has decided that owning a factory is a luxury it can no longer justify while it is trying to repair its debt position.
The trading update also gave the clearest picture yet of how the three brands are travelling, and the split is stark. Kathmandu same store sales rose 4.8 percent across the first 24 weeks of the second half, with New Zealand stores outperforming Australian ones. Oboz, the American hiking boot brand, returned to growth in the fourth quarter after a weak run. Rip Curl, which is by far the largest of the three by revenue, went backwards, with direct to consumer same store sales down 2.8 percent on the same period a year earlier.
KMD put that down to conditions across the Tasman, telling the market that Rip Curl sales continue to be impacted by subdued consumer sentiment in Australia along with competitive pressure in the category. An unusually warm start to winter in eastern Australia did not help either, though the same weather pattern worked in Kathmandu’s favour on this side of the Tasman, where a wet, cold run pushed shoppers towards rainwear, fleece and base layers.
For the full year, KMD now expects group sales of between $1.04 billion and $1.044 billion, up about 5 percent on the $989 million it recorded in 2025. Underlying group earnings before interest, tax, depreciation and amortisation are forecast at $38 million to $41 million, against $17.7 million the year before. That is more than double, which sounds spectacular until you remember the starting point. The company posted a $13.1 million net loss at the half year and has been working through a $27.5 million cost reduction programme across the current financial year.
Net debt is the figure that explains the factory sale. KMD expects to finish the year with between $63 million and $66 million of it, up from $52.8 million a year earlier. Debt rising while earnings more than double is an awkward combination, and it is why every spare dollar from asset sales is being pointed at the balance sheet rather than at growth.
The divestment sits inside a wider review the KMD board launched in May, covering capital structure, portfolio configuration and what the company called other value creation opportunities. External financial and legal advisers were brought in to run it. Announcing that review on 27 May, chair Philip Bowman said our commitment to creating long term value for shareholders is the board’s clear priority. The review is due to wrap up on or shortly before the full year results on 23 September.
Portfolio configuration is the phrase worth watching. In plain language it means the board is looking at whether it should still own all three brands. A group that has just sold its only factory, refinanced its debt in June and consolidated 1.8 billion shares into roughly 72 million at the start of July is a group clearing the decks. Each of those steps on its own is housekeeping. Taken together over eight weeks they look like preparation for something larger, and the September results date is the obvious moment for it.
The one for 25 share consolidation, completed on 2 July, is a good illustration of how far the company has fallen from its listing days. Consolidations do not change what a shareholder owns, but companies generally only bother when the share price has drifted so low that the raw number stops being meaningful to investors. KMD raised equity through a placement and entitlement offer earlier in the year, which is what created the enormous share count in the first place.
For New Zealand, the practical read is reasonably encouraging in one narrow respect. Kathmandu, the brand founded in Christchurch in 1987 and still the most visible part of the group here, is the one trading well, and it is trading better in its home market than in Australia. The pressure sits with Rip Curl and with the Australian consumer, and that is a problem the Thai factory sale does nothing to solve. It buys time rather than customers.
Whether that time is enough depends on what the board announces alongside the full year numbers in September. Until then KMD has a stronger balance sheet, one fewer asset, and a surf brand that still is not selling.
Should KMD hold on to all three of its brands, or is it time to break the group up? Let us know what you think in the comments below.
This article was written by AI, briefed to report the facts, hopefully without some of the bias people bring to the job 🙂
Leave a Reply