KMD Brands Trading and Business Review Update

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KMD BRANDS LIMITED
ASX / NZX / Media Announcement

27 May 2026
(All amounts in NZ$ unless otherwise stated)


Q3 builds continued performance improvement through Next
Level execution


KMD Brands Limited (NZX/ASX: KMD, “KMD” or the “Group”) provides the following update on
trading performance for the third quarter of the 2026 financial year and progress against the Next
Level strategy.
Total sales results for the nine months to end of April were:








Direct-to-consumer same store sales (including online) on a constant currency basis for the first 12
full weeks of the second half from Monday 2 February to Sunday 26 April 2026 were:
• Kathmandu +8.9% YOY
• Rip Curl -0.8% YOY
Group gross margin for Q3 FY26 is 58.2%, approximately +258 bps higher YOY with improvement
across all brands. Q3 FY26 gross margin improved +140 bps compared to 1H FY26.

Rip Curl
Total global direct to consumer sales have grown YOY benefiting from favorable foreign exchange
impacts within a dynamic marketplace. Sales momentum softened following the onset of the Middle
East conflict, with higher fuel prices and rising interest rates further impacting global consumer
sentiment. North American flagship stores continued to deliver strong comparable sales results YOY.
Wholesale sales remained in line with last year.
Gross margin for Q3 FY26 improved +202 bps YOY, due to promotional cadence. Q3 FY26 gross
margin improved +62 bps compared to 1H FY26.


1
Total sales YTD benefit by approximately +3% from the year-on-year movement in exchange rates used to convert Rip Curl AUD and
Oboz USD results to the Group NZD reporting currency.

TOTAL SALES
CHANGE YOY
1

(unaudited)
H1
6 months
Aug 25 to Jan 26
Q3
3 months
Feb 26 to Apr 26
YTD
9 months
Aug 25 to Apr 26
Rip Curl +4.6% +4.0% +4.4%
Kathmandu +12.3% +12.0% +12.2%
Oboz +6.5% -8.9% +0.4%
Group +7.3% +5.2% +6.6%

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Kathmandu
Total sales increased by +12.0% in Q3 FY26 despite a net reduction of seven stores YOY including
one closure within Q3. Same store sales (including online)

increased by +12.6% YOY in Q3 FY26
(+8.9% at constant exchange rates) continuing sales momentum in both Australia and New Zealand
with consumers responding positively to improved product innovation, assortment and flow.

Kathmandu delivered growth across key product categories, including insulation, demonstrating that
the Next Level product led recovery is beginning to resonate with customers. Sales growth continues
in both member and non-member sales in Q3 with the key winter trade period still to come.
Gross margin for Q3 FY26 improved +233 bps YOY, driven by diversification of product mix and
further refinement of Kathmandu’s markdown management strategy. Q3 FY26 gross margin improved
+257 bps compared to 1H FY26.

Oboz
Total sales declined -8.9% in Q3 FY26 with performance impacted by wholesale shipment timing. Q2
FY26 benefited from earlier shipments of Q3 new season styles to fulfill accelerated demand and
meet expanded partner door growth. Sales are anticipated to return to growth YOY in Q4 FY26,
driven by continued online growth and flow of new product launches. Online performance accelerated
+19.3% in Q3 FY26 following the Shopify launch.
Gross margin for Q3 FY26 improved +374 bps YOY reflecting actions taken to offset the US tariffs,
and cycling specific clearance of inventory in the prior year. Q3 FY26 gross margin improved by +570
bps compared to 1H FY26.

Next Level Update
Store Network Optimisation
The Group continues to focus on the profitability of its store network as part of the Next Level
integrated marketplace strategy, with 16 stores already closed in FY26 and additional doors targeted
to close where sustainable rent outcomes cannot be agreed with landlords.
Stores continue to be evaluated against profitability thresholds along with clear criteria to deliver
optimum performance for the store portfolio, including geographic alignment with strategy, presence
in attractive shopping locations and alignment with brand store segmentation and category.
The third Kathmandu “Next-Gen Concept Store” announced earlier in the year opened on Little
Collins Street in Melbourne this month. The new Kathmandu store format showcases the return to
product innovation and seasonal brand stories, offers enhanced product assortments and a simplified
in-store navigation to elevate the customer experience.

Digital Execution
The Group continues to prioritise the reset of the digital business to leverage the recent Shopify
implementations in all three brands to improve product storytelling, customer experience and drive
conversion. Online sales YTD at Q3 FY26 are + 4.7% YOY and online sales as a % of total DTC
sales for the Group represents 13.5% as the Group continues to prioritise digital capability and
initiatives to progress towards its mid-term online penetration targets.

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International Reset
Following the reorganisation of Rip Curl North America operations in H1 FY26, management
anticipates the North America business delivering EBITDA positive results by the end of FY26
(excluding restructuring impacts).
Kathmandu remains focused on digital expansion and leveraging third party distribution partners
internationally to enable future profitable growth.

Brent Scrimshaw, Group CEO and Managing Director, KMD Brands said:
“It’s pleasing to see momentum building in our Next Level execution. Despite challenging broader
market conditions, the Group has continued to deliver encouraging progress in Q3, balancing sales
execution and gross margin expansion together with operational and cost discipline.”
“At Kathmandu, the sales growth delivered in the first half has continued into the third quarter,
reflecting a sustained customer response to improved product led innovation and excitement at retail
through better storytelling and flow. Rip Curl has remained resilient in a more volatile global trading
environment and delivered meaningful gross margin improvement whilst we reset the business.”
“The quality of earnings across the Group is strengthening, supported by disciplined pricing, improved
product mix and ongoing cost control. Nine months into the first year of execution, our Next Level
transformation strategy is demonstrating that we are building a stronger, deeply connected and more
resilient business, while remaining on track to achieve our medium-term targets.”

Outlook
The Group remains alert to the risks associated with the current geo-political tensions. The likely
increase in the cost of living in the markets where KMD Brands currently operates, coupled with
interest rate increases, can have a strong influence on consumers’ discretionary spending patterns,
which can directly impact Group sales. Defending significant market share gains in a more
competitive North American marketplace remains a priority for Rip Curl in the fourth quarter.
The Group anticipates gross margin benefit from net tariff receivables of approximately US$5million
submitted in North America awaiting formal acceptance by authorities.
Despite the challenging consumer environment, the Group remains on track to deliver $27.5m cost
savings in FY26 and subsequently deliver operating expenses broadly flat YOY on a constant
currency basis (before any FY26 management incentives). The YOY impact of global currency
fluctuation is expected to have a significant impact on underlying operating expenses.

KMD Brands Board announces business review
The Board of KMD Brands today also announces that it is undertaking a business review, with the
purpose of delivering improved returns for shareholders. KMD Brands remains focused intensely on
improving the performance of its brands and strengthening the Group overall.
KMD Brands continues to see significant opportunity for performance improvement through its Next
Level strategy of disciplined cost control, more focused utilisation of the Group’s brand and operating
capabilities to capture identified growth opportunities, and margin expansion. Detailed commentary on
KMD Brands’ Next Level strategy for “Creating a Stronger KMD Brands” was provided in the Group’s
31 March 2026 investor presentation.
As updated today, substantial progress continues to be delivered against the Next Level strategy, and
ongoing execution is expected to deliver improved returns for shareholders. Following the completion

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of KMD Brands’ recent recapitalisation, the Group now has an improved capital structure to better
enable the execution of that strategy.
In parallel with the disciplined execution of the Next Level strategy, the Board has resolved to initiate
a comprehensive business review to assess whether other opportunities may exist to accelerate the
realisation of shareholder value. The review will examine the Group’s capital structure, portfolio
configuration and other value-creation opportunities. To assist KMD Brands in this process and to
bring additional commercial rigour and independence to it, the Board will appoint external financial
and legal advisers to lead the process; those appointments will be finalised over the coming weeks.

Philip Bowman, Chair KMD Brands, said:
“Our commitment to creating long-term value for shareholders is the Board’s clear priority. In parallel
with our focus on improving KMD Brands’ operating performance, this business review is an
appropriate next step at this time. The Board is committed to assessing all credible options that have
the potential to deliver superior value for shareholders.”

The Group’s day-to-day operations will continue as usual during the review, and customers, suppliers
and team members should not expect any change in service or engagement. The Board does not
intend to provide further commentary on the review until the process is complete, unless
circumstances otherwise require disclosure. The business review is expected to be complete on or
shortly before the announcement of the FY26 Annual Results in September 2026. There is no
certainty that any material initiative or transaction will result from the business review, and
shareholders are not required to take any action at this time.

This announcement has been authorised for release to NZX / ASX by the Board of Directors of KMD
Brands Limited.


ENDS

For media and investor enquiries, please contact enquiries@kmdbrands.com
or
Frances Blundell, Chief Legal & ESG Officer and Company Secretary
companysecretary@kmdbrands.com