KMD Brands, the Christchurch-founded company behind Kathmandu, Rip Curl and Oboz, has reported a statutory loss of $414.4 million for the year to 31 July 2026 after writing down the value of all three of its brands by $462.7 million. Strip out that one-off charge and the picture looks very different. Group sales rose 6.5 per cent to $1.05 billion, underlying earnings more than doubled, and the board has confirmed it is in talks with a small number of outside parties who have approached the company about a possible deal.
The result, released to the NZX on Wednesday 23 September, shows an underlying loss of $9 million, an improvement on the $28.3 million underlying loss a year earlier. Underlying earnings before interest, tax, depreciation and amortisation climbed 137.7 per cent to $42 million. Gross margin lifted 120 basis points to 57.7 per cent of sales, net debt fell $4.7 million to $48.1 million, and no final dividend was declared.
The write-downs were spread across the group. The NZ Herald reported impairments of $279.5 million against Rip Curl, $146.2 million against Kathmandu, $36.7 million against Oboz and $437,000 against the corporate arm. After tax the charge comes to $394 million. Chief financial officer Carla Webb-Sear told analysts on the results call that the charge “does not of itself affect the company’s cash flow, banking covenants, or day-to-day operations”, and said the board “took a conservative view having regard to the current macroeconomic environment” when it set the forward-looking assumptions behind the numbers, according to a transcript published by Investing.com.
The size of the charge reflects how much the company paid to build its portfolio. Kathmandu was founded in Christchurch in 1987 and listed on the NZX and ASX in 2009. It bought the American hiking footwear brand Oboz in 2018 and paid A$350 million for the Australian surf brand Rip Curl in 2019, before renaming itself KMD Brands in 2022. Goodwill and brand values carried on the balance sheet since those purchases have now been marked down to reflect weaker trading and a tougher outlook for consumer spending in the company’s main markets.
Kathmandu itself was the standout of the year. Sales rose 11.1 per cent to $402.3 million despite a net reduction of four stores, and the brand swung from a $19.6 million loss to a $1.1 million profit at the earnings before interest and tax line. Ragtrader reported that Kathmandu same-store sales, including online, grew 8.2 per cent. Rip Curl sales rose 3.8 per cent to $571.2 million and Oboz sales rose 3.8 per cent to $79.5 million. In the first seven weeks of the new financial year Kathmandu same-store sales are up 7.4 per cent and Rip Curl same-store sales are up 1 per cent, while Rip Curl’s Ozmosis multi-brand chain in Australia is down 12.1 per cent.
Group chief executive Brent Scrimshaw put the improvement down to the turnaround plan he announced a year ago. “The actions taken through Next Level are translating into improved financial performance. All brands returned to revenue growth in FY26,” he said. The Next Level plan set a minimum target of $25 million in cost savings, and the company says it delivered $27.5 million in the year just ended with a further $10 million of annualised savings identified for the year ahead. “The progress achieved during FY26 reinforces our belief that there is substantial potential within the business,” Scrimshaw said. “While there is more work to do, we enter FY27 with clear priorities and growing momentum.”
The more consequential news for shareholders may be the confirmation of outside interest. The board began a wide-ranging review of the business in May 2026. According to the results announcement, “the review resulted in actions to simplify the Group and enhance its financial flexibility”, including a decision to sell the company’s manufacturing facility in Southeast Asia. The board also tested outside interest in the Ozmosis chain but found that “no proposal emerged that offered greater value than continuing to rationalise the chain”. It is now weighing what it describes as indicative approaches from external parties.
Chair Philip Bowman, who took over from David Kirk on 1 May 2026, said in the announcement that “the board determined that further engagement with a limited number was appropriate”. He added that “these discussions remain preliminary in nature and no certainty exists that any proposal will lead to a transaction”. Inside Retail reported Bowman as saying that “while the group remains focused on executing its ‘Next Level’ strategy, we believe it is appropriate to continue discussions with a small number of parties”. On the results call Scrimshaw said “there is no deadline and no certainty that any transaction will result”.
This is not the first approach the company has fielded this year. In March KMD Brands rejected a proposal from Stokehouse, a United States surfwear company led by former Billabong executive Paul Naude, to split Rip Curl into a separately listed company and merge it with Stokehouse. Kirk, who was still chair at the time, said “the concept proposed by Stokehouse creates no value for shareholders and is challenging from an execution standpoint”. The company argued that Stokehouse’s small contribution to combined earnings did not justify the 22 per cent stake it would have taken in the merged business.
Guidance for the 2027 financial year is cautious. The company is targeting sales of between $1.055 billion and $1.075 billion, which implies growth of only about 1 per cent at the midpoint, and underlying earnings before interest, tax, depreciation and amortisation of between $52 million and $55 million. Capital spending is expected to be $15 million to $16 million and no dividend is forecast. “Our guidance assumes the consumer environment remains challenging,” Webb-Sear told analysts. She also said the company had received $8 million in tariff refunds before balance date as it continues to work within the United States tariff regime that affects its footwear and apparel imports into that market.
Investors marked the shares down on the day. KMD Brands fell 10 cents, or 4.95 per cent, to $1.92 on the NZX on Wednesday, according to the NZ Herald market report, on a day the NZX 50 fell 0.4 per cent and ended a five-day winning run. The interest.co.nz daily market update noted the stock was still 13 per cent higher over the past month, so some of the good news in the underlying numbers had been priced in before the result landed.
For New Zealand the result matters beyond the numbers. Kathmandu is one of a handful of locally founded retail brands with genuine international scale, and it remains headquartered in Christchurch. The write-downs mostly relate to the Australian surf business the company bought at the top of the market, while the New Zealand outdoor brand at the heart of the group is the part that is now growing fastest. Whether the approaches now on the table lead to a change of ownership, a break-up, or nothing at all, the next few months will decide who ends up owning one of the country’s best-known retail names.
Do you shop at Kathmandu or Rip Curl, and have you noticed the changes in stores and pricing over the past year? Should a New Zealand-founded brand like Kathmandu stay in local hands? Tell us 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 🙂
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