AAP Finance

Kathmandu owner holds capital raising at steep discount

Mar 31, 2026

Signage at a Kathmandu store (file image) — Kathmandu's owner KMD Brands is offering shares at a massive discount in order to raise funds. -AAP Image

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 lenders baulked at extending the retailer more financing.

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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 said 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 said.

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," said 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 ended 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 used 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 end of 2026/27.

KMD Brands chief financial officer Carla Webb-Sear told analysts that after talking to KMD's lender base, it became clear the company needed to hold a capital raising to extend its debt facility.Â

"That was obviously done in conjunction with a longer-term view to get the business to a position where we could get long-term financing, and equity was a component part of that," she said.

KMD on March 24 said it rejected an proposal by US-based surfwear company Stokehouse Unlimited to de-merge Rip Curl into a separate ASX- and NZX-listed company that would later merge with Stockhouse.

RBC Capital Markets analyst Jackie Moody said while the equity raise addressed a key concern, KMD's trends appeared to be deteriorating, with top-line growth slowing and margins contracting.

"With revenue and gross margin trends weakening amid a highly uncertain consumer backdrop we remain cautious," Ms Moody said.