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Kathmandu Says Full-Year Net Falls 37% on Margins

Kathmandu Holdings Ltd., a New Zealand-based retailer of outdoor equipment, said full-year earnings fell 37 percent as the company cut prices to bolster sales, reducing profit margins.

Net income fell to NZ$9.4 million ($7 million) in the year ended July 31 from NZ$14.9 million a year earlier, the Christchurch-based company said in a statement today. Full-year sales rose 14 percent to NZ$245.8 million.

Kathmandu, which has 36 stores in New Zealand, 55 in Australia and six in the U.K., said there was a “challenging” economic environment in all three countries it operates in and same-store sales contracted in the second half. The company expects consumer demand to improve and plans as many as 15 new outlets in the current year to further boost earnings.

“We’ll be targeting the same level of increase in sales and profitability that we achieved this year,” Chief Executive Officer Peter Halkett said on a conference call today, without providing any detailed forecasts.

Kathmandu shares rose 1 cent to NZ$1.78 as at the 5 p.m. market close in Wellington. The stock has slumped 17 percent the past three months, the worst performer in the NZX 50 index.

In the year, the gross profit margin fell 120 basis points on the year earlier reflecting promotions and pricing levels, the company said. Demand was curbed by unfavorable warm weather in Australia during the third quarter and weak trading in New Zealand in the fourth quarter, it said.

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