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Thread: KMD - Kathmandu

  1. #1171
    percy
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    Quote Originally Posted by winner69 View Post
    Very ethical company so maybe not the case

    They plant one tree for every pair of shoes sold ...cool
    Most probably Oboz would be a better fit with Hiut Jeans,?

  2. #1172
    Speedy Az winner69's Avatar
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    Quote Originally Posted by percy View Post
    Most probably Oboz would be a better fit with Hiut Jeans,?
    I’ll tell Xavier about Hiut ....next takeover target for him eh
    “ At the top of every bubble, everyone is convinced it's not yet a bubble.”

  3. #1173
    Speedy Az winner69's Avatar
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    We critiqued this takeover well percy haven't we

    Surprised the many Kathmandu shareholders on this site haven't come out and told us how good it is
    “ At the top of every bubble, everyone is convinced it's not yet a bubble.”

  4. #1174
    Speedy Az winner69's Avatar
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    Quote Originally Posted by percy View Post
    The excitement builds.?

    Wonder what Rod Duke makes of it.?
    Doubt Rod that impressed ...he likes selling things and not making things

    Doubt he'll be rushing out to stock oboz in Rebel
    “ At the top of every bubble, everyone is convinced it's not yet a bubble.”

  5. #1175
    Speedy Az winner69's Avatar
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    percy ....these boots your scene?
    “ At the top of every bubble, everyone is convinced it's not yet a bubble.”

  6. #1176
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    Quote Originally Posted by winner69 View Post
    We critiqued this takeover well percy haven't we

    Surprised the many Kathmandu shareholders on this site haven't come out and told us how good it is
    Only a Kat shareholder via my interest in Briscoes but, like percy and others I'm not excited about the prospect. Sounds like moving away from the knitting for the sake of size and "international expansion"?

  7. #1177
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    Oboz get 4+ stars for customer satisfaction on Amazon (US$173 for the pair above)

  8. #1178
    percy
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    Quote Originally Posted by winner69 View Post
    percy ....these boots your scene?
    No me,but they look as though they would do the business.

  9. #1179
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    interesting to see the concerns over the OBOZ acquisition, with not a lot of positive enthusiasm for it. I'll rise to the bait and outline a more bullish case ...

    first, good result from KMD core business. the improvement in inventory, margins, and the recent sales growth since the period-end all very impressive (big sales periods yet to come of course). so well done KMD.

    re: OBOZ. Yes, I agree, it's a stretch and outside their core competency as a NZ/Aust centric, apparel active-wear retailer. So a few red flags. BUT there is a bullish scenario. First, they know OBOZ well. They've been retailing their stuff for 10 yrs and were OBOZ's second customer, IIUC. They're not looking to integrate OBOZ and the head of OBOZ stays on to run OBOZ (query for how long of course). Second, there seems good alignment in terms of corporate and brand values & positioning. OBOZ seems established with well-regarded products. Third, shoes aren't necessarily a horror business. Yes, I recall MHJ shoes; but Berkshire Hathaway owns a couple of footwear businesses and they're well performed. Ie, H Brown & Brooks. Some of the Australian apparel/footwear chains have performed eg I had a terrific run with Colorado some years back. Fourth, valuation seems ok. 10x EBITDA for a business that is capital light, with a track record of good growth - from the limited financial details I've seen, it's not obviously an overpay (yes, some risks from the lack of contracts, but I guess if they have well-established relationships, that's valuable too. Plus, how long would the manufacturing/distribution contracts be for anyway. One -two seasons?) Fifth, KMD might be able to leverage the OBOZ relationships to sell more of its other product into the US market. Some potentially large revenue synergies there (albeit that may not ever eventuate).

    I agree this changes the risk profile of KMD and stretches mgmt further. They are also paying more for OBOZ in terms of valuation multiples than the multiple which KMD trades on - so a risk the market won't pay up for the acquisition. On the other hand it does offer some growth options.

    The big question: would I have done it if I run KMD? The acquisition is not compelling enough in my view, so probably not. But I'm a risk-averse type of investor ...

    PS. I'm also a BGP shareholder (much larger stake) ... with hindsight perhaps Rod should have paid up when BGP had the chance. I can't believe he would support the OBOZ acquisition, but at 20% ownership he doesn't get much more say in matters than you or I do.

    Ultimately, the question is: how much confidence do we have in KMD board and mgmt to manage this well and deliver on the bullish scenario? hhhmm. Simonet has done well, IMHO, but the chair I worry about it. Esp. the lack of retail and international experience, his track record doesn't convince me. OK, ok, I tried to be bullish ...

  10. #1180
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    You make a good case for the defence, jg, and the bullish scenario may well play out to be correct. A positive is that BGP supports the capital raising so I guess that means that Rod D is on side!

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