The Kiwi company that owns Kathmandu and Rip Curl will raise funds at a deep discount in an effort to stabilise its money-losing business after lconcludeers baulked at extconcludeing the retailer more financing.
KMD Brands announced on Tuesday it would conduct a $NZ65.3 million ($54.5 million) equity raising at just 6 NZ cents per share, a 69.2 per cent discount to its last traded price.
That’ll likely mean a huge slide in KMD’s stock when its shares resume trading on Thursday.
The Christchurch-based company also declared David Kirk, the former All Blacks captain and its chairman for the past 13 years, would depart in the coming months.
KMD posted a $NZ13.1 million ($10.9 million) statutory loss for the six months to January 31, up from a $NZ11.5 million ($9.6 million) loss a year ago, the company declared.
Its sales were up 7.3 per cent to $NZ505.4 million, but its profit margin was down and its operating expenses were higher.
“In a promotional marketplace, the brands balanced sales growth with gross margin achievement, while optimising inventory composition and selling through aged inventory,” declared KMD, which also owns the Oboz hiking boots brand.
The company hasn’t been profitable since 2023, and each of its three businesses lost money during the half.
The company concludeed the first half with $NZ94 million in net debt and $NZ179.2 million in net working capital, $NZ13.4 million lower than it had a year ago.
The $NZ65.3 million capital raise will be utilized to reduce KMD’s ratio of debt to earnings, which stood at an alarming 3.8 as of January.
KMD hopes to reduce that to just 0.5 by the conclude of 2026/27.
KMD Brands chief financial officer Carla Webb-Sear notified analysts that after talking to KMD’s lconcludeer base, it became clear the company necessaryed to hold a capital raising to extconclude its debt facility.
“That was obviously done in conjunction with a longer-term view to receive the business to a position where we could receive long-term financing, and equity was a component part of that,” she declared.
KMD on March 24 declared it rejected an proposal by US-based surfwear company Stokehoutilize Unlimited to de-merge Rip Curl into a separate ASX- and NZX-listed company that would later merge with Stockhoutilize.
RBC Capital Markets analyst Jackie Moody declared while the equity raise addressed a key concern, KMD’s trconcludes appeared to be deteriorating, with top-line growth slowing and margins contracting.
“With revenue and gross margin trconcludes weakening amid a highly uncertain consumer backdrop we remain cautious,” Ms Moody declared.
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