7 Feb 2020

Kathmandu clothing firm draws up plans for Wuhan coronavirus disruption

12:01 pm on 7 February 2020

Outdoor clothing retailer Kathmandu has yet to see any impact of the coronavirus on sales or its supply chain, butit has drawn up contingency plans if disruption hits its Chinese suppliers.

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Photo: RNZ / Alexander Robertson

Group chief executive Xavier Simonet said it was watching carefully the impact of the virus across its business.

"The group sources product from a diverse range of markets throughout Asia, and is actively monitoring any developments on its supply chain as a result of the coronavirus outbreak in China," he said.

"There is not expected to be a material supply impact in the short term as sufficient inventory levels are held. The group has mitigation plans in place if there is a prolonged disruption to our Chinese suppliers."

Kathmandu expected a 40 percent increase in underlying earnings for the half-year ended December, which will include three months revenue contribution from the Rip Curl surfwear business.

Kathmandu acquired the Australian global surf and sports company Rip Curl last year for $368 million, in a mix of debt and shares.

The group's sales were up on modestly on a year ago, although its margins had slimmed due to currency movements.

Simonet said Rip Curl's sales grew, but overall group sales in December could have been better.

"The Christmas trading period has seen a further shift towards Black Friday and Boxing Day events," he said.

"Low December market foot traffic between these two events, unusually hot weather, and bush fires in Australia, have combined to moderate first-half sales."

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