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Jeremy Hutton: Milford Asset Management expert on KMD Brands reporting $414 million loss · Best of Business

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  Speaker 1: You're listening to a podcast from Newstalk ZB. Follow this
• 0:13
  Speaker 1: and our wide range of podcasts now on iHeartRadio. With
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  Speaker 1: us right now, we have Jeremy Hutton, Milford Asset Management. Hi, Jeremy.
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  Speaker 2: Good evening, Heather.
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  Speaker 1: So KMD Brands had its financial result out today. What
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  Speaker 1: did you make of it?
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  Speaker 2: Yeah, KMD Brands, they're the owner of a few well-known
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  Speaker 2: retail brands such as Katmandu and surf brand Rip Curl. Unfortunately,
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  Speaker 2: it's been a disappointing stock for investors over a number
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  Speaker 2: of years, exasperated by that emergency capital raise they did
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  Speaker 2: earlier this year. But this result... Profit on an underlying basis,
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  Speaker 2: it was still a $ 9 million loss. So still highlights
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  Speaker 2: a lot of work to go there. But at least
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  Speaker 2: it was better than the previous year. And their outlook
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  Speaker 2: for the 27 year was slightly better again from a
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  Speaker 2: sales and profit perspective. So at least directionally going the
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  Speaker 2: right direction.
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  Speaker 1: The share price has been leading the NZX this month.
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  Speaker 1: Were the investors expecting a stronger result, do you think?
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  Speaker 2: Yeah, I mean, the share price tailed off about 5% today.
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  Speaker 2: So perhaps a little bit of disappointment around the margins.
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  Speaker 2: But you're right. I mean, over the September month, it
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  Speaker 2: is leading the NZX. It's up around 15%. And I
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  Speaker 2: think the market was probably looking for a bit more
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  Speaker 2: from the strategic review that's underway. I mean, the board
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  Speaker 2: did acknowledge today that they have received some indicative approaches
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  Speaker 2: to try and realize some value for KMD shareholders. They
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  Speaker 2: have decided to engage with a few of them. So
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  Speaker 2: we'll see how those pan out. And we know there's
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  Speaker 2: been some interesting activity on the shareholder register today. a
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  Speaker 2: well-known Australian retail entrepreneur, Josh Rudd. He has built a 6%
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  Speaker 2: stake and there has been a lot of interest from
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  Speaker 2: other surf brands in that Rip Curl business to try
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  Speaker 2: and carve that off. So I think investors in the
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  Speaker 2: near term will be watching that corporate action. Yeah.
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  Speaker 1: And then look, if you're looking at it from a
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  Speaker 1: macro economic perspective, are you seeing some surprising strength here?
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  Speaker 2: Yeah, I mean, there was an interesting call out by
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  Speaker 2: the business in the Kathmandu brand and particularly around the
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  Speaker 2: New Zealand sales results. I mean, those sales were 11.7%
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  Speaker 2: higher than 2025. And in Australia, relatively modest, 4.3%. So
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  Speaker 2: definitely a better New Zealand result and a noted reversal
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  Speaker 2: in fortunes compared with the previous years. I mean, we
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  Speaker 2: all know how hard the New Zealand consumer has been going.
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  Speaker 2: This has been dragging down that Kathmandu result. So I
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  Speaker 2: suppose just another data point of our very recent outperformance
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  Speaker 2: in Australia. And we know the Australian economy is having
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  Speaker 2: a few issues with housing, plenty of interest rate hikes
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  Speaker 2: coming there and potentially some consumer challenges coming as well.
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  Speaker 1: Yeah, Jeremy, good point. Thank you very much, mate. Jeremy Hutton,
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  Speaker 1: Milford Asset Management.