Kathmandu may be sold before its turnaround proves anything

KMD Brands has confirmed it is in exclusive takeover talks with Bluestar Alliance, the US group behind Hurley, Dickies, Off-White and Palm Angels. Bluestar is running due diligence on buying the whole company, with exclusivity running to a long-stop date of 23 December and no guarantee a binding offer emerges.

The easy read is a struggling retailer selling out to a weak Kiwi consumer. The more accurate one is less comfortable for shareholders. The owner of Kathmandu, Rip Curl and Oboz is being courted just as its operating numbers turn, and before the market has had a chance to price that recovery.

The loss is mostly an admission, not a collapse

KMD’s FY26 annual report shows sales of NZ$1,053.0m, up 6.5%, gross margin up to 57.7% from 56.5%, and underlying EBITDA more than doubling to NZ$42.0m from NZ$17.7m. That is not a business in freefall.

The ugly bottom line, a statutory loss of NZ$414.4m in the audited accounts, is driven by a NZ$462.7m intangible impairment. That is a non-cash write-down, and the clearest sign yet that management has accepted what it overpaid for brands in years past. Reported figures vary, it should be said. InsideRetail cites a statutory loss of $333.5m and the AFR described it as more than $300 million. The gap likely reflects currency or reporting basis, but the company’s own audited number is the one to anchor on.

Kathmandu is not the patient

The brand most New Zealanders know is quietly doing well. Kathmandu’s total sales rose 11.1% in FY26 despite trading from four fewer stores, with New Zealand up 11.7%, same-store sales up 8.2% and online sales up 9.6% to NZ$57.1m.

The July trading update had already shown where the problem sat. Over 24 weeks of the second half, Kathmandu same-store sales were up 4.8% while Rip Curl’s fell 2.8%, with New Zealand outperforming Australia throughout.

KMD blames warm weather, geopolitics and soft discretionary spending for heavy discounting. Fair enough, but Kathmandu grew strongly through the same conditions. The consumer backdrop does not explain this sale process. Rip Curl and a history of expensive acquisitions do.

The bill for past ambition

In March 2026, BusinessDesk columnist Eden Bradfield called KMD “a dumpster fire”, noting the stock had shed 85% of its value over five years. His most damning arithmetic: KMD paid $368m for Rip Curl, yet the whole group, Kathmandu and Oboz included, was then worth only $142m on the market. Oboz, bought for US$60m, was largely written off after then-CEO Michael Kirk conceded they had overpaid.

Bradfield also questioned differentiation, writing that “Kathmandu is where you go to get your kids a backpack or a sleeping bag before they go to school camp… It’s a retailer selling stuff from China. So many others are, too.” That critique has merit for Rip Curl. Kathmandu’s FY26 numbers suggest it is holding its own in a crowded mid-market.

From rejecting suitors to inviting them

In March, KMD rejected a demerger proposal from Stokehouse, a firm founded by former Billabong executives, to spin off Rip Curl, while working with Goldman Sachs on capital strategy after its prior-year loss nearly doubled to $94m. Six months later, after a capital raise and a strategic review with Deloitte and Barclay & Co, the board disclosed multiple non-binding approaches for individual brands and the whole group, and moved to sell its Southeast Asia factory and test interest in the Ozmosis chain.

That is a board that has stopped defending the portfolio and started pricing it.

Who captures the FY27 upside

Here is the tension. FY27 guidance points to sales of NZ$1,055-1,075m and EBITDA of NZ$52-55m, roughly a quarter higher than FY26. If that lands, the recovery becomes visible in the share price. A buyer locking up exclusivity before Christmas gets in before that happens.

None of this makes Bluestar the villain. Private capital correcting a public company’s allocation mistakes faster than its own board managed is how markets are meant to work, and a consolidator that builds value through brand management may extract more from Rip Curl than KMD ever did. The question for minority shareholders, many of whom sat through the capital raise, is narrower: does any offer pay them for the business KMD is becoming, or the one it has been?

The board has until 23 December to answer that. Shareholders should insist the price reflects the guidance, not the impairment.

Sources

• RNZ: Kathmandu owner KMD Brands enters exclusive talks over possible takeover (2026-11-02)
• InsideRetail: Dickies owner Bluestar advances KMD Brands takeover talks (2026-11-02)
• AFR: Rip Curl owner KMD Brands courts suitors after plunging to hefty loss (2026-09-23)
• KMD Brands Limited Annual Report 2026 (2026-09-23)
• KMD Brands FY26 Investor Presentation – September 2026 (2026-09-01)
• NZX: KMD Brands Trading Update and Planned Divestment (2026-07-22)
• BusinessDesk: KMD Brands’ strategy feels like a self-inflicted wound (2026-03-27)
• RNZ: What’s going on at Kathmandu owner KMD Brands? (2026-03-28)