1H FY18 Media Release

Kathmandu Holdings Limited
FY2018 first half results

 Sales increased by 4.3% to NZ$204.8m
 Gross profit increased by 7.2% to NZ$129.7m
 EBIT increased by 21.6% to NZ$18.0m
 NPAT increased by 23.0% to NZ$12.3m
 Interim dividend NZ 4.0 cents per share
 KMD announces acquisition of Oboz

Kathmandu Holdings Limited (ASX/NZX: KMD) today announced net profit after tax (NPAT) of
NZ$12.3 million for the six months ended 31 January 2018, an increase of NZ$2.3 million
compared with the prior corresponding period. Earnings before interest and tax (EBIT)
increased from NZ$14.8 million to NZ$18.0 million for the same period.

Summary of Results

NZD $m Change
1H FY2018 1H FY2017 NZD $m %
Sales 204.8 196.3 8.5 4.3%
Gross Profit 129.7 121.0 8.7 7.2%
EBITDA 25.1 21.5 3.6 16.7%
EBIT 18.0 14.8 3.2 21.6%
NPAT 12.3 10.0 2.3 23.0%


Chief Executive Xavier Simonet commented:
“Striking the right balance between generating sales growth and improving our gross margin
has fuelled healthy earnings growth in the first half. Sales momentum improved through the
end of the Christmas trading period and into February and March.”
“Our financial position continued to strengthen during the first half year and we ended the
period with healthy inventory and record low half year net debt.”

Sales, Store Numbers, Gross Margin and Inventory


Sales Growth
Sales grew by 3.7% in Australia, our largest market. New Zealand first quarter sales were
impacted by lower levels of clearance stock. In the last six weeks of the first half-year, New
Zealand same store sales growth was +1.9%. Online sales now comprise 8.0% of group sales.

Total Sales
Growth
Same Store
Sales Growth
Australia 3.7% 1.9%
New Zealand (6.4%) (6.3%)
Group (constant currency) 0.8% (0.8%)
Group (NZD reporting currency) 4.3% 2.7%
Note: Same store sales are for the 26 weeks ending 28 January 2018


Gross Margin
Gross margin increased 1.7% points from 61.6% in 1H FY17 to 63.3% in 1H FY18. Increased full
price sell through and higher average selling prices contributed to the improvement.

Inventory
Total inventory levels decreased by 12.7% (NZ$12.2m) from 1H FY2017 and by 13.8% on a per
store basis.

1H FY2018
NZD $m
1H FY2017
NZD $m
Change
NZD $m
Change
%
Change
per store %

Inventory

84.2

96.4

(12.2)

(12.7%)

(13.8%)

At the start of the financial year, clearance inventory levels were c. 40% below last year. While
this impacted clearance sales performance, particularly in the first quarter in New Zealand,
there were benefits to both gross margin and inventory handling costs. By the end of the first
half, the reset clearance stock levels were more in line with last year.

The reduction in total inventory continues to demonstrate the benefits of investments made in
forecasting and planning technology.

Operating Expenses

On a constant currency basis, operating expenses increased by $1.5m (1.5%) in 1H FY2018.
Operating expenses (excluding Rent) decreased by 0.3% as a percentage of sales, with supply
chain efficiencies from lower inventory handling costs achieved following automation of the
Australian distribution centre last year.

Rent increased on a constant currency basis by NZ$1.4m, primarily from key store relocations
and new stores opened.

Operating expenses (excluding depreciation)

1H FY2018
NZD $m
1H FY2017
NZD $m
Rent 33.2 30.5
% of Sales

16.2% 15.5%
Other operating expenses 71.4 69.0
% of Sales

34.9% 35.2%
Total operating expenses 104.6 99.5
% of Sales 51.1% 50.7%


Other Financial Information

NZ$8.7m was invested in capital projects, primarily in re-positioning and updating our store
network.

Continued working capital efficiency led to record low half year net debt and subsequent lower
financing costs. Gearing remains very conservative.

1H FY2018
NZD $m
1H FY2017
NZD $m
Capital Expenditure 8.7 6.8
Operating Cash Flow 16.9 10.0
Net Debt 17.0 48.9
Net Debt to Equity 4.9% 13.8%

Interim Dividend

An interim dividend of NZ$ 4.0 cents per share will be paid to shareholders on the register as at
8 June 2018. The dividend will be fully franked for Australian shareholders. The interim
dividend will not be imputed for New Zealand shareholders. The final dividend is expected to
be fully franked and fully imputed.

Trading Update

For the six weeks ending 11 March 2018, Group Sales were 7.9% above last year at constant
exchange rates. Same store sales growth was 7.5% for Australia and 5.1% for New Zealand.
February gross margins were also above last year in both countries.

Oboz acquisition

Kathmandu has agreed to acquire US-based Oboz Footwear LLC for a base cash consideration
of US$60 million, and earn-out of up to US$15 million. Oboz designs, sources, and sells
footwear for backpacking, hiking, travel, winter and general outdoor wear. Oboz distributes its
products directly to North American outdoor chains, specialty outdoor retailers, limited online
sellers, shoe stores and sporting goods retailers. For more information, please refer to the
Oboz acquisition announcement released on the ASX and NZX.

Outlook

Chief Executive Xavier Simonet commented:

“We are focused on delivering profit growth in our core markets for the second half of FY18.
The Australasian business provides the foundation for our brand to expand internationally. As
always the success of our full year result is still very dependent on the key promotion periods
to come.

We will continue to inspire our customers by creating distinctive, sustainable, quality products
and by promoting our brand authenticity.

As our wholesale business in Europe is expanding, we are now very pleased to announce the
acquisition of Oboz, an innovative outdoor footwear brand based in North America. This is a

significant event for the company, accelerating our international growth, and diversifying our
product mix, geography and channels to market.”



ENDS

Media:
Helen McCombie
Citadel-MAGNUS
Tel: + 61 2 8234 0103
Investors:
Reuben Casey
Chief Operating and Financial Officer
Tel: +64 3 968 6166