KMD has announced that sales across its brands were down 8.4% in its half-year results.
👉 Background: KMD is the outdoor and sportswear company that was founded in 1987 in New Zealand. It's the company behind well known labels such as Kathmandu, Rip Curl, and Oboz.
👉 What happened: KMD has announced that sales across its brands were down 8.4% in its half-year results, and it's forecasting earnings of $47 million for this financial year - that's less than half its earnings from the previous year.
👉 What else: This news sent KMD’s share price down over 5%. And KMD's not expecting things to get better anytime soon, so it's taking early action, and negotiating with its lenders to lower its fixed-charge coverage ratio.
💡Fixed-charge cover ratio measures a company’s ability to cover its fixed expenses with its operating income.
💡Fixed expenses like leases or equipment hire, stay the same no matter how many sales a company is making. So in order to be financially stable, a company needs to be able to cover those costs even when times are tough.
💡In just the last week, City Chic announced it’s expecting a 30% drop in sales, and Mosaic Brands, announced an expected loss. So it's no surprise, that during this period of low consumer sentiment, KMB is making sure its fixed-charge cover ratio is in check.
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