KMD Brands Limited (KMD) Earnings Call Transcript & Summary

Thank you for standing by, and welcome to the Kathmandu Holdings Limited H1 FY '21 Kathmandu Results Investor call. [Operator Instructions] I would now like to hand the conference over to Mr. Xavier Simonet, Group CEO. Please go ahead.

Thank you, Bernadette. Good morning, everyone, and thank you for joining us on today's presentation of the Kathmandu Holdings results for the first half of the 2021 financial year. My name is Xavier Simonet, and I'm the group CEO of the company. I'm joined on the call by Chris Kinraid, our Chief Financial Officer and Board Chairman, David Kirk, who will participate in the Q&A session. We'll be talking to the presentation lodged on the NCDEX and ASX this morning. Unless otherwise specified, all financial numbers are in New Zealand dollars. Moving quickly on Slide 2, which briefly covers our first half group results. Despite the ongoing COVID-19 impacts in key global markets, the group has achieved strong first half results. Rip Curl delivered an outstanding first half results, validating the group's diversification strategy. Benefiting from increased participation in surfing in Australia, Europe and the U.S. Rip Curl achieved strong sales and profits despite key store closures underpinned by the brand technical product focus and strong consumer engagement. Pleasingly, Rip Curl's wholesale order book is above pre-COVID-19 levels. Kathmandu was particularly impacted by COVID-19 related store closures and travel restrictions with less international trouble to the northern hemisphere winter resulting in reduced demand for installation and rainwear products. However, we did see renewed interest in local travel and adventure, which led to strong demand for camp, beach and footwear products. Oboz achieved sales growth as a result of the successful product innovation strategy and diversification of its customer base. And we also saw increased participation in hiking. The group continues to benefit from our cautious operational and capital management along COVID-19 and a strong cash-generating ability of our brand. Turning on to Slide 3. I'd like to discuss in more detail the group's first half financial year highlights. As I mentioned previously, our half year results were underpinned by the strong performance of Rip Curl. Total group sales were up 12.9% on prior year, which includes a full 6-month contribution from Rip Curl. This result validates our diversification strategy, which we will continue to leverage going forward. We continue to be cautious around our operating costs in response to the current uncertain trading conditions. As such, there were some significant restructuring and synergy savings and rent abatements, supplemented by government wage assistance. Taken together, this has allowed us to improve through first half trading profit, achieving an underlying EBITDA of $48.2 million. Pleasingly, we saw a step-change in our group online sales penetration increasing to 12.7% of direct-to-consumer sales, a sizable increase over the previous corresponding figure of 8.8%. We finished the half with a strong balance sheet with net debt of $10.1 million, following careful management of our working capital. Moving to Slide 4. I want to expand on the increase in group online penetration that we saw over the half. As a result of changing consumer preferences brought about by the COVID-19 lockdown period, we saw an acceleration in online sales. Investments we made into our omnichannel capabilities allowed our brands to capture this growth in online sales, which saw group online sales grew 18.5% to a record $36 million. Online penetration remains significantly above pre-COVID levels, above Rip Curl and Kathmandu. Rip Curl key online sales growth was significantly higher across key markets, registering 107% growth in U.S.A., 47% growth in Australia and 78% in Europe. Kathmandu online sales of $18.6 million in the half representing 14.4% of total direct-to-consumer sales, which was up from 10.5% in the prior year. We're excited to build on our online success with Rip Curl and Kathmandu by launching an Oboz's online store in the UK. Moving on to Slide 5 now. Sustainability is at the core of our brand. We certainly believe that actions are inextricably linked to our value. So I'm proud to announce that the Kathmandu brand has reached its carbon neutral milestone 4 years ahead of schedule, which we're excited to have achieved such a milestone. Our ambition doesn't stop there, and the group will set the science-based carbon reduction targets moving forward. I'd like to highlight some other notable sustainability achievements. The Kathmandu brand meets a higher standards of environmental and social performance as certified by its B Corp status. Kathmandu is also a member of the Fair Labor Association, meeting 100% sustainable cost and obtained the Rainbow Tick certification in New Zealand for embracing diversity and inclusion. For Rip Curl, last year marked the 20th anniversary of Rip Curl Planet Day, where our crew work with local councils to rejuvenate the coast. Rip Curl also scored a B+ in the Ethical Fashion Report for the second year running, and collaborated with Kathmandu on its first sustainability report. As for other, 3.3 million trees have been planted since the company's inception. And gender diversity are maintained -- has improved with female representation reaching 41%. Turning to Slide 6. I now want to discuss the impact we saw from the COVID-19 pandemic and how we responded. Clearly, COVID-19 had a major impact on our business in the first half. Over 60 Greater Melbourne stores were closed for over 11 weeks; 14 stores in Auckland were closed for 2 weeks and several CBD and Airport stores as well as stores in Hawaii, Bali and Europe are still impacted by other COVID-related travel restrictions or government-mandated lockdowns and closures. In addition, wholesale sales for the half were impacted by the missed sell-in season during the initial lockdown in April and May 2020 for delivery in October to December 2020. I'm very proud of the rapid response our team implemented to react to changes in consumer preference. With participation in surfing increasing, Rip Curl responded quickly to demand for wetsuits and related surfing products. Kathmandu up-weighted its focus on summer camping and footwear to respond to increased interest in local travel and adventure. And our omni-channel capability allowed our brands to capture record demand online. I will now hand over to Chris to cover the remainder of the presentation.

Thank you, Xavier. Moving on to the group results overview on Slide 8. Statutory results include the adoption of IFRS 16. For comparability, the impact of IFRS 16 has been excluded from our underlying results. The first half of FY '21 includes a full 6 months of Rip Curl, compared to the first half of FY '20, which included 3 months of Rip Curl post acquisition. As you can see, we have recorded positive financial metrics. Total sales in the first half of the year increased to $410.7 million, and underlying EBITDA increased by 19% to $48.2 million. As previously mentioned by Xavier, we continue to act cautiously around the management of operating expenses. The approach is now helping our underlying results as we receive the benefits of rent abatement as well as the $15 million in annualized cost reductions from restructuring and synergy savings. Government wage assistance across geographies contributed to a net benefit to operating expenses of $15.2 million. Depreciation also included a $2.5 million notional amortization of Rip Curl customer relationships. Interest cost in the first half includes the noncash write-down of the $2.1 million one-off bank facility underwriting costs relating to the Rip Curl acquisition. These have been excluded from the underlying results. Moving to operating cash flow on Slide 9. We again delivered strong cash flow of $10.7 million despite the challenging conditions. Given outflow in working capital of $17.9 million, driven primarily by a reduction in payables, pending result of final agreements with landlords on rent abatements that we [ assembled ] at our year-end release last year. CapEx for the full year is expected to be circa $30 million with continued investment in systems and capabilities. Moving to our balance sheet on Slide 10. We are in a very strong position. We've managed our inventory very carefully, and our current inventory position is well placed in the COVID demand environment with low clearance stock levels. These liabilities have reduced due to leases progressing through their fixed lease terms. On to Slide 11. You can see a breakdown of the net debt over the past 3 years. Net debt has decreased to $10.1 million following the capital raise in April 2020. This has given a significant headroom in our current facility of circa $380 million. It should be noted that, historically, the second half of the financial year for the Kathmandu brand generates very strong cash inflows. Currently, the group complies with all debt facility covenants, and we're currently in the process of reviewing our debt facility, which is expected to increase flexibility, reduce drawn funds and introduce sustainability linked financing. Subject to normal trading conditions, we expect to be in a positive cash position by the end of the year. To Slide 12, interim dividend. In light of the improved trading conditions, the group has resumed paying dividends with our directors declaring a New NZD 0.02 per share interim dividend. The dividend will not be imputed for New Zealand shareholders. It will be fully franked for Australian shareholders. I'll now move to the segment results and performance of each of our brands. Looking at Rip Curl in more detail on Slide 14, we can see the underlying P&L for the 6 months, the first half -- in the first half compared to 3 months in 2020. On a comparable 6-month basis, total sales were 4.3% below last year. Sales growth achieved in key markets. Direct-to-consumer same-store sales grew strongly for 27 weeks ended 31 January, was $0.21 growth adjusted for store closures, a 7.4% growth overall. Sales in our online channel grew significantly on the comparable second month period last year, up 79%, comprised 11.2% of DTC sales. Furthermore, as a result of higher mix of direct-to-consumer sales, our gross margin is 40 basis points above the 6-month period last year. Lockdown disrupted the wholesale selling period for deliveries in October to December 2020. However, order book for subsequent seasons are now above pre-COVID-19 levels, reflecting customers restocking and strong category performance. Moving on to Slide 15. This showcases a few of our flagship Rip Curl product innovations, a key theme of Rip Curl and all of our brands is technical excellence and innovation, which allows us to provide the best possible products for our customers. Continuing with market-leading swim collections, the Paradise Calling summer collection joins the sustainable Saltwater Culture family, providing customers an eco-friendly range of quality surf products. The Anti-Series Puffer Collection and Anti-Series Heatseeker Jacket embody the synergy shared across our brands. The proforma utilizing Kathmandu expertise to develop new technical insulation styles, and the latter leveraging technology from the successful Heatseeker wetsuit program. Slide 16 covers the group commitment to a global brand leadership of Rip Curl. We have recently signed a 3-year partnership for the new Rip Curl World Surf League Finals, a season-ending, 1-day competition that will decide the men's and women's World Surfing Champions. Rip Curl also holds the sponsor naming rights to 3 new events on the WSL World Tour, Rip Curl Cup Newcastle, Rip Curl Classic Narrabeen and the Rip Curl Search Rottnest Island. Rip Curl has also secured ongoing sponsorship of the Rip Curl Pro Bells Beach when it returns in 2022. Lastly, Rip Curl is launching a brand-new global campaign, including 50 of our international team rider, which include diversity, inclusivity and sizes for all. Moving to the Kathmandu brand on Slide 18, it shows Kathmandu's underlying P&L for the first half pre-IFRS 16. COVID-19 lockdowns and travel restrictions and store closures impacted on Kathmandu financials. Total sales 34.9% below the first half of last year. In Australia, sales were 40.5% below last year, with 27 Greater Melbourne stores closed for 11 weeks. And New Zealand, total sales were 23.4% below last year with 14 Auckland stores closed for 2 weeks. Same store sales were 30% below last year when adjusted for lockdown closures and 35.4% below last year overall. Low footfall in shopping centers, CBD stores and tourist locations acted in tandem, which reduced demand for insulation and rainwear, resulting from a lack of international travelers to the Northern Hemisphere, impacting on total sales. Online penetration increased from 10.5% of sales in the first half FY '20 to 14.4% of sales in the first half of FY '21. Also pleasing, the strong demand for camp, beach and footwear and the renewed interest in local travel and adventure. Kathmandu sales have been historically weighted for the second half of the year, when winter in Australasia drives natural demand for insulation and rainwear. Kathmandu operating expenses included the benefits from restructuring, rent abatements and net government wage assistance. On the Slide 19, we continue to lead innovation in sustainable technology. Slide 19 shows how we have developed products focused on sustainability. For example, a 100% recycled biodegradable fleece, a world's first. Built in partnership with Primaloft, takes down a highly accelerated open landfills and [ fashions ] and return to its natural elements. Turning to Slide 20. We have an active and engaged customer base with a Net Promoter Score of 76, 3% above the second half of last year. We continue to leverage the Summit Club loyalty program, driving personalization of the customer relationship, building brand loyalty. And we have 2.2 million active Summit Club members, representing over 70% of total Kathmandu sales. We're continuing to invest in personalization capability, boosting loyalty performance based in data analytics and insights to drive stronger relevancy and, in turn, higher conversion. Turning on to Oboz, Slide 22. So Oboz profit and loss in its local U.S. dollar currency. Oboz sales grew 3.8%, reaching $22.1 million for the half, driven by a successful product innovation strategy and increased participation in hiking. Gross margin was impacted significantly by a one-off airfreight cost of USD 1.1 million and support key customer delivery of winter seasonal sales. Gross margin will normalize to historical levels for the second half. Pleasingly, our forward order book is well above pre-COVID-19 levels, enabling business to support future growth, which includes the development of the new online store, which is set for an imminent launch. Moving to Slide 23. Oboz has been broadening the appeal of its product range since acquisition, target a younger, more diverse and active consumer segment. It is evidenced by the successful sell-in of the new Sypes and Bozeman Collection, achieved while maintaining the strength of core Bridger and Sawtooth active focus styles. These have always been a focus of the group, accordingly, Oboz has launched a first-ever diversity, equity and inclusion report. Oboz currently is a highly reputable brand, is the #1 selling outdoor footwear brand in the U.S., the outside business journal annual survey of American independent retailers. This comes off the back of our successful Truist influencer program that has been implemented in conjunction with the launch of the True to the Trail podcast. It has contributed to a 37% growth in Oboz social media audience. Now move to Slide 25, our group strategy. Our group strategy has not changed throughout the challenging period. We're a global outdoor lifestyle and sports store company underpinned by iconic brand and technical products with focus on sustainability. We've been building a portfolio of brands that provides diversification across geographies, channels, product and seasonality, which will allow us to meet global year-round needs of customers in the outdoor sport and lifestyle categories. We leverage the portfolio, delivering operational excellence in sourcing, supply chain and systems; accelerating digital transformation; and driving margin expansion through synergies, complementary expertise and core capabilities of our brands. And by maintaining a relentless focus on core customers, delivering solutions to their needs, we'll be able to grow these brands to a global scale and enhance customer loyalty. In particular, we'll continue the development of technical, differentiated and sustainable products, accelerate the expansion of the direct-to-consumer business. Throughout the whole journey, we will remain true to our values. Sustainability is part of our DNA, it has been ingrained in everything we do. We also embrace diversity and inclusion in the workplace and build strong ties with local communities. Turning to Slide 26. Key strategic priorities for FY '21 remain unchanged. We remain committed to delivering on our strategic imperatives. As noted previously, the strong Rip Curl performance achieved in the first half of FY '21 validates our diversification strategy. In the second half, Kathmandu is very well positioned to perform in its traditionally strong winter season. Group continued to leverage the portfolio of the brands at its disposal. Online penetration increased to 12.7% in the first half, up from 8.8% last year. In the second half, we will continue to invest in our digital program, including loyalty management, merchandise planning, personalization using data algorithm, data-driven insights into consumer preferences as well as ERP and point-of-sale upgrades. We'll be implementing a loyalty program at Rip Curl with the end goal of improving analytics, customer loyalty and, ultimately, conversion results. Launch of Oboz online store and increasing personalization of data analytics in Kathmandu also will be a priority in the second half. Lastly, following on from the carbon neutral certification of the Kathmandu brand, we'll be setting a science-based carbon reduction target for the group. We're also working towards a group-wide B Corp certification, engaging with key stakeholders in a Group ESG materiality assessment. Moving on to outlook on Slide 27. Our Kathmandu enters a traditionally strong winter season very well prepared. Oboz investment in new products sees it enter the second half with an order book well above pre-COVID-19 levels. Rip Curl continues to trade in line with strong first half trends. And wholesale order books are above pre-COVID-19 levels. The long-term growth fundamentals remain in place with strong iconic brands and we create technical and innovative products. We have a loyal customer base and a growing global reach. Secondly, the lockdown conditions appear to have increased participation on outdoor, hiking, beach and surfing activities. Our brands are well positioned to capitalize on the change. The rollout of COVID-19 vaccines is expected to benefit international travel in the long term to, in turn, provide strong growth opportunities. We have a strong cash-generating business with low debt, which provides us with the flexibility to pursue particular growth opportunity and growing returns for our shareholders. This now concludes the formal part of today's presentation. I'd like to thank all our shareholders for their support and for taking the time to join us on the call. I'd like to now open the call to questions, where myself and David Kirk, our Chairman, will be available for questions.

[Operator Instructions] Your first question comes from Andrew Steele of Jarden.

Just the first one for me is on Rip Curl. Could you just call out the level of rent payments and wage assistance that you received in the first half? And then I guess related to that, looking forward, what would you say you think sort of sustainable EBITDA margin is in that business?

In terms of the rent abatements, it's about $2 million for each brand. And the wage assistance -- and the way I look at it, the wage assistance is that's probably neutral against the impact of store closures for the Rip Curl brand in the first half. So the impact is very little. Our long-term target for Rip Curl has always been 15% EBITDA margin. So we've achieved that in the first half. We expect some moderation in the second half. But we remain committed to that long-term goal.

Okay. And so would -- just to be clear, were you saying that you had the 15% on a full year basis for this year? Or is that sort of going to think in future years will moderate back towards that FY '22 year?

Yes, I mean we had a very strong first half of Rip Curl. There's a lot of kind of COVID impacts to enter in the second half, but I'm really confident on our target.

Great. And just on the Kathmandu brand. You've called out the negative impact of weakness in specific categories. Could you actually call out how much was winter down and total categories down? And then what does that look like, the relativity to the all other categories? Is it just that both ones were down significantly and all others were flat or modestly up? What does that picture look like?

Yes. I'll start on specific individuals category. I mean for like-for-like categories, that was a significant impact on trading for that half and first half. As well as, I think, real travel-related in terms of control of cities. So that outweighs the upside we saw in camps, footwear and pure [ travel-related ] gear. So that impacts largely came through to the numbers in terms of the treating the loss.

And just again, sorry, to clarify on that course. So you're saying that sort of outside of those categories that you've specifically called out, which were impacted, all others were they broadly up on average or flat on average?

It's like, [ say, ] for example and winter products are what's been -- other categories are also impacted. So across that mix, the weighting of insulation, rainwear and winter products, which we traditionally sell quite strongly in the first half. Obviously, travel that outweighs the impact of the category performance.

[Operator Instructions] Your next question comes from Guy Hooper of Forsyth Barr.

I just want to [ clarify on ] Kathmandu and the other brands. So how would you characterize, I guess, any movements in markets here or market position for that brand over the last year?

I mean overall the market at Kathmandu -- I mean different brands have different characteristics. In the outdoor segment -- our outdoor and travel segment is quite a broad segment, so a pure like-for-like is really hard to measure. We remain pretty confident in terms of those key insulation rainwear that has impacted in the first half of our overall positioning in the market. You can't just compare. I know that you're talking about guide, but you can't just compare to it like-for-like because of the difference in product categories and extended brands, which some of our competitors sell and have a higher summer product lines as well. So you can't compare to that. So overall, I think in terms of our winter-weighted products, we're pretty confident in terms of our market share in those categories.

Okay. And I guess around inventory movements. I mean how are you feeling about those? Do you expect them to return to prior year levels at year end? And are these -- maybe some comments just around, I guess, a routine or normal promotional calendar or a little discounting in the ticket?

Yes, in terms of inventory levels, I mean, we're in a pretty clean inventory position. There may be some slight restocking of some area in inventory. So there'll be some movement, but not a material movement in inventory position. Bigger challenge of inventory, as you're aware, is just supply chain, getting them on time for shipping out. We're reasonably confident for our inventory position to deliver in the second half.

Your next question comes from Marni Lysaght of Macquarie.

David and Chris, just wanted to clarify, can you give us a walk-through like maybe the sell-through rate that you've seen in the channels that Oboz and Rip Curl are exposed to? How much of it would be demand and how much of it would be maybe this is just pure speculation, but that maybe inventory balances a little weaker in those retail partners because of the COVID and planning not really corresponding weaker demand levels?

Yes. I mean there's definitely an element of inventory restocking, we believe, and some of the forward orders. Rip Curl -- we've seen in the Rip Curl channel, based on sell-through and our own retail stores, so -- and we see that in shops generally. So we're confident that there's elements of both in there in terms of the category performance as well as inventory restocking. So Oboz U.S., we definitely -- there's some inventory stocking in the part of that. But we're really pleased with the performance of Oboz through its key customers, customer base, as we talked about in the presentation. So I think it's a mix of a restocking and category performance.

My second question just relates to -- starting off here. Just trying to understand, I mean, your trade receivables, the allowance for expected credit losses is in large base. It is above -- remained above pre-pandemic levels. Can you perhaps run us through how we think about receivables moving forward? I just note that, obviously, the receivables are down too, and kind of how is -- how are the inventory sales talking to that?

I mean -- so yes, we're in a sort of, I think, the reasonable position here. We've actually seen that collection to be very strong, especially in the U.S. market and European market. So overall, we're very comfortable with our current collection and receivables that's been operating.

Your next question comes from Mark Wade of CLSA.

I appreciate the comments you made earlier that you're saying the Kathmandu brand is well prepared in the second half. Can you expand on some of the plans that Oboz, kind of in the next couple of years, you'll really reinvigorate that brand in Australia, New Zealand and to improve the awareness of some of the newer markets in North America?

A reinvigoration, Mark, I mean, it's -- the last one was a record ones over -- across Kathmandu brands. So and we're pretty confident with the stock levels of presales and our strong brand positioning and promotional calendar set up. So I think we're well positioned for that one coming up. We're always reviewing product mix and category to Kathmandu. And there are some things on the horizon just to support the brand activity. I mean we continue to invest in that space in our website. So we're always looking at that going forward, and I'm pretty confident that as we go through markets opening up -- because that's been the biggest impact on Kathmandu is just the pure lack in travel and track -- but we start seeing that even to meet the tours and open up further, we're confident that we'll see some improvement there.

Okay. And maybe, David, if I can ask you for an update on the search for a replacement for CEO, the specific qualities being sought in that candidate, and perhaps what aspects of the group strategy are set in stone versus what's open to change.

Good morning, everyone. Thanks for the question. We're well along the way with our new CEO search. We have appointed a vendor to support us on the process. We are past along the phase and we're moving into interviews of shortlisted candidates. So we were reliant on -- in terms of start date, reliant on the arrangement of the chosen candidate and their current agreement, if they come from outside the organization. But we have progressed well, and we're very interested in some of the candidates. So that's good. The chief executive will bring their own name to the organization, but we feel that there's a clear strategy being put through by management and engaged with by the Board and committed to by the Board and the management. And that strategy we've seen unveiled over the last couple of years, and we think it's been a successful strategy as we look at the contribution that have made in this period. In particular, I think it would be difficult to disagree that it's been a good strategy to differentiate and diversify by season, by hemisphere, by product. But only to do so in acquiring and investing in brands that are consistent with the portfolio and in Kathmandu's roots and in the Rip Curl's roots, which are typical brand, which had a strong element of emotional connection in the brand and omnichannel approach to going to market. I think you can expect that type of thinking to continue. As I said, the chief executive will, of course, bring his or her name on there.

Your next question comes from [ Paige Tennessee ] of [ ACC ].

My first question is just around the $15 million in cost savings and really whether or not you expect to see them endure continuing on through the year and whether there are any additional cost savings to come.

Yes. I mean largely that $15 million is ongoing. So we expect that to continue. So we're pretty confident in that. We've already gone pretty hard on some of that review of the cost structure. So there's no -- in terms of term at the moment, significant other cost out been happening. But we always review our cost structure to be a decision of possible -- in light of what we need to do within the group. So that currently, we can't really say.

Okay. Great. And obviously, a lot of interest in Kathmandu and how it can perform through the winter. Do you guys -- are you able to provide a trading update on how it's tracking in the last couple of weeks?

I mean it's pretty clear with the comparison against the slightly timing difference on promotional calendar, you compare pre-COVID impacts right now last year. But we have an improved pick-up on those key points of sales, but as you have an idea.

Your next question comes from Chris Byrne of Craigs IP.

I guess one for you, David. Your balance sheet is obviously very strong. You've talked about being able to use that for opportunities. Is that sort of more within your current assets? Are you sort of talking about looking at further acquisitions? And I guess in that lens, you have diversified now driving fleet by geography and by season. If you were going to acquire further, I mean, what traits would you be looking at that would fit the bill as to why you would acquire?

Chris, yes, we -- the company is in a strong position now. We're mindful that we're not -- the world is not completely out of the woods with COVID. And we need to get -- it's unpredictable, the next 6 months to 1 year. So that gives us some caution in terms of maintaining a strong balance sheet. I don't think anything's changed with regard to the fundamental strategy, and therefore, the fundamental attractiveness of potential acquisition opportunity. And it's worth stressing that we are not acquiring sort of if they could get us bigger, just for the sake of delivering on a strategy only. We put scale aside, we want to deliver on the strategy but only the financial returns from the investment, whether by acquisition or whether investments in the current segment need to be very strong. And then we get, in particular, currently around that move the overall margin for error. So we don't see anything in particular that we would be rushing to make a major investment in, either internally or externally, good opportunity for internal investment to grow the capability and profitability over time at the current business. But we will remain measured, keep our antenna up for opportunities, but we're not rushing out to allocate a whole lot of capital at the moment.

Great. And just one final quick one. Any thoughts on rebranding the group?

Yes. There are thoughts on rebranding the group. We haven't landed on that, but that's been a subject of discussion at the Board a couple of times. We've got some sort of rather more pressing things just recently to deal with, but we will come back to that. And we will continue to consider that. What do you think? It's a good idea. Yes, in particular just to separate the brand of the group from the brand of each operating company.

Yes. So to separate Kathmandu, the fact you've diversified now is not really reflected in the name. So look, it doesn't mean you have to change it. I just wonder whether you -- something you're considering which are, personally, I think would make sense, but when it is the right thing to do.

Your next question comes from Julian Mulcahy of E&P.

Just curious, just drilling into the Kathmandu numbers. I mean the $68 million fall in revenue is quite sharp, particularly when you look at Macpac. I know that's small but that's only sort of modest reduction. So curious if you can put a figure around how much you actually lost in rainwear, in installation sales in relation to international people. And whether it's more about a market share issue than anything.

Can I -- sorry, Chris to jump in, I just -- you can correct me here. It's really worth understanding that Macpac now, the current Macpac and Kathmandu are not really comparable in terms of product mix, and therefore, product views focused. We know that Macpac is a rebranding of all Super Retail Group Ray's Outdoor and changed it to -- just Rays, sorry. And Rays is very much focused on larger format camping and outdoor, a lot of boating, a lot of stuff that's quite domestically focused. Of course, Kathmandu and the peers have suffered largely because of the lack of international travel. And I think one of the thing that's not particularly comparable amongst the 2, where the stores actually are. And CBD, there is to be quite significant footfall, falling strongly in CBD area, compared to working from home. And so they're -- in their very nature, sort of in park. So I think there are 2 things. Channel mix and product mix are pretty relevant when it comes to overall sales comparisons between Macpac and Kathmandu in the period. Sorry, Chris, back to you.

That's fine, David. I've got nothing more to add.

Probably just -- can you quantify what the $68 million in drop in revenue was, in relation to...

Yes. I mean no market has been a better market than Kathmandu as well. So yes there's a period of closure. And then that third quarter as well, a significant impact, about 28 new stores in that market alone at Kathmandu. So I mean it's I agree it's likely kind of 3 quarters of the impact.

Right. Okay. So I mean online sales is up strongly. But clearly online purchase, you don't get those add-ons, you may have got a few in-store. Is that a fair assessment?

It's always great that a customer is in store as well. You can engage with a customer's point of view to engage with customers. So there was a good preference to have that customer interaction. And that's clearly important for all retail -- all retail going forward. So for the Kathmandu brand, that's something that's -- especially in that summer period that's quite important.

And there are no further questions at this time. That does conclude our conference for today. Thank you for participating. You may now disconnect.