Key to this was gross margins, which fell from 58.4% in 2024 to 56.5% in 2025, reflecting the highly promotional retail environment.
KMD Brands group chief executive Brent Scrimshaw is undertaking a significant strategic reset of the group’s operations.
Overall, the group reported a statutory net loss of $93.6m in 2025, larger than its $48.3m loss in 2024.
The group’s underlying net loss also grew, increasing from a loss of $1.1m in 2024 to a $28.3m loss in 2025.
Scrimshaw said the business had recently completed its restructure, which was designed to deliver immediate cost efficiencies.
“We are investing in product innovation that continues to ground our brands in technical performance whilst delivering improved speed-to-market, design and style. We are also introducing our integrated marketplace strategy, which includes the implementation of store segmentation to drive optimisation of our store network,” he said.
“We see the potential for an enhanced digital business which includes a renewed focus on the group’s performance-marketing capabilities. In addition, following a successful launch in Kathmandu in the fourth quarter of FY25, we are now implementing the Shopify e-commerce platform in Rip Curl and Oboz in the first half of FY26.”
Brand performance
Looking at the individual brands’ performance, Kathmandu sales increased by 0.2% from $361.1m in 2024 to $361.9m in 2025.
Despite a -8.8% year-on-year performance in the third quarter, the fourth quarter and winter trading period delivered a +2.5% year-on-year performance.
Australian sales increased by 0.2% year-on-year, while New Zealand sales were down by 2.3%. Both locations did see positive sales growth year-on-year in the fourth quarter.
Online sales did increase by 9.3% year-on-year to $52.1m, comprising 14.5% of direct-to-consumer sales, but gross margin for the brand decreased by 3%.
Surfing brand Rip Curl increased sales by 2.1% compared to 2024, up from $538.9m to $550.4m, although the brand’s earnings before interest and tax fell by 49.3%.
Meanwhile, sales of footwear brand Oboz declined again, down 3.5% from $79.4m in 2024 to $76.6m in 2025, although Oboz’ intangible assets have been impaired by $45.4m.
Trading update and outlook
In the group’s first trading update for the 2026 financial year, August 2025 sales were up 10.5% and in the first seven full weeks to September 14, 2025, Kathmandu sales increased by 19.4% year-on-year while Rip Curl sales fell by 1.2% year-on-year.
The group said gross margins in the first half of FY26 were targeted slightly above the second half of FY25 as strategic promotional activity further improves inventory make-up ahead of product launches.
KMD Brands expects ebitda margin expansion in FY26, delivering stronger margin expansion in the second half of FY26.
During the group’s recent investor day, future plans were announced to close 21 stores across its network.
The group has now confirmed that it expects to close 14 of those identified in the 2026 financial year, although it is unclear whether New Zealand stores will be among those confirmed to shut.
The business does plan to open six new stores across the group, including three new Kathmandu flagship concept stores, in the first six months of the FY26 financial year.
On the investor call following the result, leadership confirmed that three New Zealand stores would close over the period, but two new stores would open in their place.
Given the group’s operating performance and continuing challenging market conditions, its directors did not declare a final dividend for shareholders.
Tom Raynel is a multimedia business journalist for the Herald, covering small business, retail and tourism.