Marsh Most Improved Performance Award: Kathmandu

Outdoor clothing and travel equipment retailer Kathmandu first appeared on the Deloitte/Management magazine Top 200 horizon in 2002. Its potential was recognised when it won place as finalist in the then Deloitte Emerging Enterprise of the Year Award.
The promise identified decade ago has been realised. The company is becoming global player in the outdoor equipment and adventure market.
This year Kathmandu showed what it can do, even when the highly competitive retail market was down and panting for patrons. Its outstanding performance has earned the company recognition with the 2011 Marsh Most Improved Performance Award – all this in its first full year trading as listed company on both the New Zealand (NZX) and the Australian (ASX) stock exchanges.
Kathmandu is another great Top 200 example of New Zealand enterprise that is intent on becoming big player in the export market. As company chairman James Strong said in this year’s annual report: “Kathmandu will now move forward as the market leader in the outdoor travel and adventure category and make further investment to enhance future growth opportunities.”
The company grew its sales by 23.5 percent to $306 million in the year. Its net profit before extraordinaries was up 47 percent and gross profit margin improved 65.5 percent.
Same store sales in both New Zealand and Australia grew by double figures and it opened 14 percent more stores across Australasia.
The performance is significant given the general economic environment and, as Strong also put it, “the challenging circumstances now facing the retail sector” as consumers cut their personal debt levels and rein in spending.
With this year’s performance and the Top 200 Award under its belt, Kathmandu plans to drive sales growth by rolling out more stores in New Zealand and Australia. It also wants to optimise its existing store footprint.
According to Strong it will also introduce new products and develop its online capabilities.
“The success of these strategies to date, combined with the delivery of the new Kathmandu brand strategy over the next two years will support the expansion of both the Kathmandu retail footprint and the range of product that we offer,” he added.
The judges this year rated Kathmandu’s performance outstanding on all the criteria they had to consider to find finalists and winner in this award category. It was, they said, simply an outstanding performance in very difficult market. “Actually, it was stellar performance,” said one judge.
The company’s focus on selling quality products, its management of cash and borrowings to reduce debt and its generally sound management processes all contributed to the result.
The judges also commented on the company’s positive approach to environmental management and its employment policies.
It was, said the judges, great all-round performance that suggests this newly listed company is serious about growth and the future of its product and service offering.
Company CEO Peter Halkett told shareholders this year that, while Kathmandu recognises and is cautious about the uncertain economic outlook ahead, “our performance through the past year gives us confidence that our focused growth strategies should continue”. M



MOST IMPROVED PERFORMANCE AWARD JUDGES’ COMMENTS

FINALIST
BALLANCE AGRI-NUTRIENTS
Strong demand for fertiliser by farmers flush with funds from strong commodity prices delivered Ballance into greener pastures and super profits this year. Favourable market conditions drove 19 percent increase in sales volumes. Management took the best possible advantage of an excellent growth opportunity, expanded its product range, made strategic investments and turned in robust performance that deserves recognition. Profit after tax increased by 375 percent and the company paid out the largest rebate in its history.

FINALIST
HELLABY HOLDINGS
After four years of business and balance sheet reconstruction, Hellaby Holdings put its best foot forward this year. The company’s diversified portfolio of New Zealand industrial, distribution and retail businesses turned in 49 percent better profit, dramatically reduced debt and boosted shareholder returns substantially. great all-round performance that supports the directors’ claim that the company has “new sense of purpose” and is working to accomplish its “vision to be leading Australasian investor”.

WINNER
KATHMANDU
Retail is tough, but Kathmandu is tougher. In very flat market on both sides of the Tasman, this retailer of outdoor clothing and accessories dressed for the occasion. It grew total sales by 23.5 percent, same store sales by 16 percent and net profit before extraordinaries by 47 percent. That is fantastic result in any economic climate. The good news does not stop there. Kathmandu expanded its product range and opened more stores, lifting its portfolio in New Zealand, Australia and the UK to total of 111. Kathmandu dresses to kill the competition and deserves to win the Marsh Most Improved Performance Award for 2011.

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