Outdoor retailer Kathmandu’s focus on operational execution helped it deliver same-store sales growth in the first half of FY20, despite seeing lower foot traffic in December due to the rise of Black Friday and the unusually hot weather and bushfires in the lead-up to Christmas.

In a trading update provided to the ASX on Friday, the retailer said underlying EBIT was up around 40 per cent, excluding the impact of the new IFRS 16 leasing standard and one-off costs related to the acquisition of Rip Curl in October 2019.

“Our diversification strategy has shown early benefits, with the Rip Curl surf focus helping to balance out the Kathmandu business,” Xavier Simonet, Kathmandu CEO said in a statement.

The outdoor retailer’s same-store sales were up 1.5 per cent for the 26 weeks ended January 26, 2020, with online sales growing 30 per cent in the period, thanks to recent improvements in its digital customer experience.

Gross margin was down around 1.4 per cent on the same period last year, reflecting previous guidance on the impact of year-on-year foreign currency movement.

Oboz, the North American footwear brand that Kathmandu acquired in March 2018, saw sales increase by around 10 per cent in the half. Oboz is stocked in major outdoor retailers, such as REI, but doesn’t currently sell direct to consumer.

Rip Curl’s sales for the post-acquisition period of November 1, 2019, through January 26, 2020, were around 2.7 per cent higher than the comparable three-month period last year, and direct-to-consumer same-store sales were up around 2.6 per cent.

Rip Curl branded stores in Australia traded up 8.3 per cent on a comparable basis in the important summer trading period.

The company said it has not seen a significant impact on consumer demand from the coronavirus outbreak and that it does not expect supply to be affected in the short term.

It sources product from a diverse range of markets throughout Asia and holds sufficient inventory levels to ride out any short-term disruptions,
assisted by the longer stock turn nature of technical product categories.

However, the retailer said it is actively monitoring any developments and has mitigation plans in place if there is a prolonged disruption to its suppliers in China.

Kathmandu will release the full result for the half year on Monday 30 March 2020