KMD Brands: Rip Curl's Parent Cleans House — And Quietly Hangs a For-Sale Sign

First year of the 'Next Level' turnaround prints real EBITDA growth, a rare tariff refund lands in the P&L, and the board admits it's fielding inbound approaches.

KMD.NZ · Earnings Call · 2026-09-22

The Turnaround That Finally Printed

KMD Brands — the NZD ~138m-market-cap parent of Kathmandu, Rip Curl and Oboz — reported FY2026 on 22 September with a set of numbers that finally look like a turnaround, not a promise. Group sales rose to NZD 1.053bn, or +6.5%, adding more than NZD 60m of revenue. Gross margin expanded 120bps to 57.7%, underlying EBITDA jumped 138% to NZD 42m, and underlying EBIT swung to a positive NZD 7.5m from a loss. All three brands grew sales growth for the first time in years. The headline stat, though, is ugly: a statutory loss after tax of NZD 414.4m, driven by a NZD 462.7m intangible asset impairment across all three brands. “This one-off non-cash item does not impact the day-to-day operations of the business, and as such, has been excluded from underlying results.” — Carla Webb-Sear, CFO · 2026-09-22 The board took the write-down "having regard to the current macroeconomic environment, expected trading conditions, and the company's market capitalization" — a candid acknowledgement that the market values KMD far below its own book. Kathmandu is the star: sales +11.1% to NZD 402.3m and a return to positive earnings. Rip Curl is the laggard in constant currency (-1.2%), but management insists the re-engineered product line — over 2,000 SKUs culled and a new wetsuit platform — "the consumer's not yet seen." The Ozmosis multi-brand chain remains the problem child, with Q1 FY27 same-store sales down 12.1% and five store closures planned.

Tariffs: A Global Windfall, A Local Accounting Question

Here's where KMD's story collides with one of the loudest market themes of the past year. tariff refund was KMD's second-highest-ranked keyword this quarter, and it wasn't a footnote: NZD 8m landed in gross margin (NZD 4.3m at Oboz alone), arriving just before year-end close. On the global tape, Tariff refund was the single highest-momentum keyword of the prior quarter (2026Q2), and fellow reporter MLKN (Tariff refunds, 2026Q3) booked the same windfall. KMD is riding a genuine macro wave here, not inventing one. The nuance is that the refund is a one-off, and management — pressed repeatedly by UBS's Marcus Curley — conceded FY2027 gross margin guidance is set above the reported 57.7% excluding the benefit, while simultaneously absorbing a fresh tariff headwind on today's imports. “we had to work on a conservative basis of not knowing when those funds would land... it was quite an unusual process.” — Paul Koraua, Analyst at Forsyth Barr · 2026-09-22 In other words: the refund flattered FY26, and the FY27 bridge rests on sourcing, FX hedges and pricing instead.

The Real Story: A For-Sale Sign

Strip away the optics and the single most important sentence in the release is buried in the business review outcome. After engaging Deloitte, Barclays and Chapman Tripp for a "comprehensive" review, the board disclosed it has received multiple inbound approaches and is engaging further.

Throughout the review process, the board has received and considered a number of indicative approaches from external parties and has determined that further engagement with a limited number of those parties is appropriate... The approaches are indicative, non-binding and incomplete, and no decision has been made, and there is no certainty that any proposal or transaction will result.
Brent Scrimshaw, CEO · 2026-09-22

That is a live M&A process dressed in continuous-disclosure language. Analysts circled it immediately — Brent refusing to put a timeframe on any decision, and confirming "there will be engagement with shareholders at that point in time" if an offer is deemed fair value. This is company-unique, high-signal news: a sub-NZD-200m consumer name, post-equity raise (NZD 65.5m completed in April), with a deleveraged balance sheet and — potentially — a buyer.

Balance Sheet: Fixed, Not Yet Pretty

On the financial plumbing: net debt landed at NZD 48.1m, better than July's NZD 63-66m guided range, and leverage improved to 1.2x from 3.3x. But Carla openly owned the miss against the original "under NZD 40m" target: “I do acknowledge that we have missed that target... the timing of our payments profile, which you can see within payables, and we've provided a bridge within the cash flow, have driven the delta.” — Carla Webb-Sear, CFO · 2026-09-22 Suppliers have shortened terms post-raise, pushing net working capital as a percentage of sales higher. The newly unlocked facility now totals NZD 205.2m, with a NZD 43m tranche maturing mid-2027 — the exact window where the M&A storyline could converge with refinancing. Meanwhile Online sales grew 9.6% (now ~15% of D2C) and the digital replatform onto Shopify delivered an immediate uplift — the cleanest structural growth lever in the story, and one that supports the 10% EBITDA-margin ambition. Bottom line: KMD posted a genuinely better operating year, landed a globally resonant tariff windfall, wrote down its brands to a humbler valuation, and — most importantly — put itself in play. The FY27 guidance of NZD 52-55m EBITDA implies continued improvement but a cautious consumer, and management's tight-lipped stance on the approaches means the catalyst is real but unpriced in any data we can see here.