Outdoor retailer Kathmandu has announced that it will purchase US-based footwear wholesaler Oboz for US$75 million (AUD$97 million) on the back of a double-digit increase in its interim net profit.

CEO Xavier Simonet said the Oboz acquisition would accelerate Kathmandu’s international growth, as well as diversifying its product mix and available channels to market.

The NZ-based retailer intends to undertake a $40 million capital raising to fund the deal, entering a trading halt to facilitate the transaction, which is made up of a US$60 million initial cash consideration and US$15 million in conditional payments.

Kathmandu’s net profit for the six months ended 31 January increased by 23 per cent to NZ$12.3 million, while earnings before interest and tax was up 21.6 per cent to NZ$18 million.

The double-digit earnings increase was driven by a 4.3 per cent increase in sales to NZ$204.8 million and a 7.2 per cent increase in gross profit to NZ$129.7 million, which Simonet said was the right balance between top and bottom line priorities.

Oboz, an American outdoor footwear company founded in 2007, wholesales a range of footwear for backpacking, hiking and travel to retailers, primarily in North America.

Kathmandu is currently the exclusive retailer of Oboz in Australia in New Zealand and believes the acquisition will allow the brand to maintain strong relationships with its other suppliers in “complementary markets” to Kathmandu.

Kathmandu is also interested in expanding Oboz’ product range into categories such as sandals and possibly sneakers.

“The acquisition of Oboz enables the Kathmandu Group to accelerate our international growth, and diversifies our product mix, geography and channels to market,” Simonet said.

“I admire the success of Oboz in North America, they are an innovative and authentic outdoor brand with deep roots in Montana … it seems very natural that after so many years of close collaboration we deepen our relationship.”

Oboz will operate independently from Kathmandu, so there will be “minimal” integration costs.

NZ sales impacted

Kathmandu’s sales grew by 3.7 per cent in Australia, its largest market, increasing by 1.9 per cent on a same-store basis.

But sales declined by 6.4 per cent in New Zealand, impacted by lower levels of clearance stock in the first quarter.

NZ same-store sales declined by 6.3 per cent, but in the last six-weeks of the half rebounded, growing 1.9 per cent.

The first-six weeks of the second-half were also stronger than the first, with group sales up 7.9 per cent on a constant exchange rate basis.

Same-store sales growth in Australia was 7.5 per cent in the first-six weeks of 2H18, while NZ continued its recovery, up 5.1 per cent.

“We are focused on delivering profit growth in our core markets for the second half of FY18,” Simonet said.

“The Australasian business provides the foundation for our brand to expand internationally, as always the success of our full year result is still very dependent on key promotion periods to come.”

More to come.