Shares in Kathmandu have plunged dramatically after the outdoor adventure retailer said slow Christmas sales in Australia would hurt profits.
"Due to both the subdued start to Australian trading in Kathmandu's Christmas sale promotion, and the reduced gross margins achieved across the full year to date in Australia, the company will experience a substantial reduction in the gross profit earned in the pre-Christmas Day trading period compared to the equivalent period in the 2013/2014 financial year," Kathmandu said on Monday.
Kathmandu shares slumped in the wake of the trading update, and were 49 cents, or 18.56 per cent lower at $2.15 at 1139 AEDT.
Australia is Kathmandu's largest market.
Kathmandu acting chief executive Mark Todd said trading in Australia throughout the Christmas period to date had been below expectations, reflecting a lack of confidence among consumers and a tough retail environment.
Kathmandu expects the challenging conditions in Australia to continue for some time, and, consequently, will assess its sales and pricing strategy for the rest of the financial year and beyond.
The company said profit for the first half of the current financial year will be down on the result achieved one year earlier.
The full year profit result depends on trading in the second half, which last year contributed over 70 per cent of the total year's profit.
At its annual general meeting in November, Kathmandu said that up to November 16, sales had lifted by 18.6 per cent so far in fiscal 2015.
But because of the reduced sales in Australia over the last five weeks, the group's total sales increase to December 21 was now 14.1 per cent.
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