KMD Brands shareholders to be stung with a hugely discounted capital raise

KMD Brands Ltd (ASX: KMD) has revealed it made a net loss for the first half and will raise NZ$65.3 million at a steep discount to its current trading price, while its shares will remain in a trading halt for now.

The company, which owns the Rip Curl and Kathmandu brands, placed its shares in a trading halt on Wednesday last week while it sought to finalise the capital raise, which The Australian reported was initially seeking to raise NZ$100 million.

Capital raise details revealed

The company this morning said it would raise NZ$65.3 million at a 69.2% discount to its last trading price on the New Zealand Stock Exchange, where its shares last changed hands for NZ19.5 cents.

KMD said it would raise NZ$6.8 million from institutional shareholders and another NZ$58.5 million from current shareholders in a fully underwritten offer.

The company has asked that its shares remain suspended from trade while it finalises the institutional tranche of the new share offer.

Sales up but books in the red

On the operational front, the company published its first-half results, with group sales up 7.3% to NZ$505.4 million, but the company posted a net loss of NZ$13.1 million.

Kathmandu was the standout performer for the group in terms of revenue increase, with sales up 12.3% and EBITDA improving from a NZ$12.8 million loss to a NZ$2.4 million loss.

Rip Curl sales were up 4.6% while EBITDA fell 13% to NZ$20.5 million.

KMD Brands Chief Executive Brent Scrimshaw said regarding the result:

Since launching our Next Level strategy, we have accelerated the pace and quality of execution and returned each of our brands to growth in a short timeframe. Strong early progress has been made against our key initiatives, giving us further conviction in our potential. We’re particularly encouraged by the improved performance of Kathmandu, which has delivered double-digit same store sales growth for the first time in over two years. It’s also pleasing to see consumers responding positively to our accelerated product freshness, flow and assortment, along with a renewed focus on innovation. While Rip Curl has navigated more volatile global trading conditions, we remain confident that the brand’s repositioning will drive long-term growth and youthful energy, connected to the next generation of core surf and beach consumers.

The company had net debt at the end of January of NZ$94 million.

On the outlook, KMD said Kathmandu had continued its recent sales momentum in the first six weeks of the second half, “with the key Autumn and Winter trading periods still to come”.

The company added:

Rip Curl and Oboz wholesale order books for 2H FY26 are in line with last year, with the Europe and North America summer season to come. Gross margin expansion is anticipated YOY in 2H FY26, reflecting actions taken to offset the US tariffs, and cycling specific clearance of inventory in the second half of last year.

Oboz is the company’s footwear division.

KMD’s Australian-traded shares last traded at 15.5 cents, valuing the company at $110.3 million.

The post KMD Brands shareholders to be stung with a hugely discounted capital raise appeared first on The Motley Fool Australia.

More reading

• What’s going on with KMD Brands shares?
• Trading halt, delayed results, and a capital raise: Why this ASX retail stock is under pressure
• Which ASX retail company just rejected a deal to buy its Rip Curl stores?

Motley Fool contributor Cameron England has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.