Latest / Best of Business / Jeremy Hutton: Milford Asset Management expert on KMD Brands' share price going up after 'brutal' few months

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Jeremy Hutton: Milford Asset Management expert on KMD Brands' share price going up after 'brutal' few months · Best of Business

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  Speaker 1: You're listening to a podcast from Newstalk ZB. Follow this
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  Speaker 2: All right, let's go to Milford Asset Management and welcome
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  Speaker 2: to the program, Jeremy Hutton. Hello, Jeremy. Hi, Andrew.
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  Speaker 3: How are you doing?
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  Speaker 2: Very good. Let's talk about KMD Brands. These are the
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  Speaker 2: guys who own Kathmandu and Rip Curl. They've been in
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  Speaker 2: the news this week. What's happening?
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  Speaker 3: Yeah, KMD Brands, and as you mentioned, owners of very
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  Speaker 3: well-known retail brands, Katmandu and Ripkill, but they have had
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  Speaker 3: a brutal 12 months or so on the share market.
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  Speaker 3: But this week has been a little bit more positive
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  Speaker 3: with the share price up 17% or so. And this
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  Speaker 3: has been driven by news that a very well-known surf
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  Speaker 3: retail entrepreneur, Josh Rudd, has bought a significant 6% shareholding
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  Speaker 3: in the business. This was released publicly yesterday. Now, this
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  Speaker 3: doesn't mean there's going to be a full takeover happening,
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  Speaker 3: but he is a successful Australian retailer. He's operated in
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  Speaker 3: that surf and street segment. And in fact, Mr. Rudd's
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  Speaker 3: original business, Gander, was also founded in Torquay, Victoria, which
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  Speaker 3: is the same place where Rip Curl is from, too.
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  Speaker 3: So you can probably say he knows the business very,
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  Speaker 3: very well. And I'm sure he's going to have some
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  Speaker 3: good tips to share to improve that KMD business.
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  Speaker 2: But like Adidas and Puma came out of the same
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  Speaker 2: German city as well. And here's the thing, the KMD
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  Speaker 2: bands board are listening because they have already signaled they're
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  Speaker 2: going to do a strategic review of the business.
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  Speaker 3: Yeah, I mean, the share price and operational performance of
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  Speaker 3: KMD has been pretty disappointing for shareholders over a number
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  Speaker 3: of years. And this was exacerbated furthermore this year with
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  Speaker 3: an emergency capital raise that they did. So shareholders got
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  Speaker 3: diluted even more. But there has been a bit of
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  Speaker 3: change in place. There's a new chair called Philip Bowman,
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  Speaker 3: who's well regarded. And he pretty much straight away signaled
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  Speaker 3: a strategic review to try and deliver some better value
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  Speaker 3: for shareholders. And, you know, those brands, Katmandu and Ripcule,
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  Speaker 3: they're pretty well known, especially in Australia and New Zealand.
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  Speaker 3: They've even got a global presence. So I think given
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  Speaker 3: the depressed share price, you know, there is potential for
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  Speaker 3: a bit of value unlock here if they get some
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  Speaker 3: transactions going.
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  Speaker 2: Yeah, share price already up 17% today, so you have
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  Speaker 2: to wonder just how much upside, but their earnings have
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  Speaker 2: been improving.
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  Speaker 3: Yeah, I mean, the management team recently upgraded their earnings
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  Speaker 3: in July, upgraded their forecast, and this will be in
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  Speaker 3: the range of double what last year's earnings were, albeit
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  Speaker 3: they were coming off a very low base, but some
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  Speaker 3: confidence there from the company that they're calling the bottom
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  Speaker 3: in the earnings after a sliding few years. The equity
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  Speaker 3: raise has taken a lot of pressure off the business operationally.
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  Speaker 3: And there have been a financial press of a lot
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  Speaker 3: of interest in that Rip Curl business in particular. And
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  Speaker 3: then also an important point in that last trading update,
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  Speaker 3: the New Zealand side of the business has been performing better. So,
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  Speaker 3: you know, perhaps some of that cyclical recovery coming through. So,
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  Speaker 3: you know, a bit more interest happening in the KMD
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  Speaker 3: brands coming up.
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  Speaker 2: Good stuff, Jeremy Hutton. I thank you so very, very much.
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