U.S. Markets closed

Edited Transcript of KMD.NZ earnings conference call or presentation 18-Sep-19 10:59am GMT

Full Year 2019 Kathmandu Holdings Ltd Earnings Call

Christchurch Oct 6, 2019 (Thomson StreetEvents) -- Edited Transcript of Kathmandu Holdings Ltd earnings conference call or presentation Wednesday, September 18, 2019 at 10:59:00am GMT

TEXT version of Transcript

================================================================================

Corporate Participants

================================================================================

* Chris Kinraid

Kathmandu Holdings Limited - CFO & Company Secretary

* Reuben Casey

Kathmandu Holdings Limited - COO

* Xavier Simonet

Kathmandu Holdings Limited - MD, CEO & Executive Director

================================================================================

Conference Call Participants

================================================================================

* Andrew Steele

Jarden Limited, Research Division - VP of Equity Research

* Guy Edward Harding Hooper

Forsyth Barr Group Ltd., Research Division - Analyst of New Zealand Equities

================================================================================

Presentation

--------------------------------------------------------------------------------

Operator [1]

--------------------------------------------------------------------------------

Thank you for standing by and welcome to the Kathmandu Holdings Limited FY '19 Results Overview Investor Call. (Operator Instructions) I would now like to hand the conference over to Mr. Xavier Simonet, Managing Director and CEO. Please go ahead.

--------------------------------------------------------------------------------

Xavier Simonet, Kathmandu Holdings Limited - MD, CEO & Executive Director [2]

--------------------------------------------------------------------------------

Thank you, Ashley. Good morning, and welcome to the FY '19 full results presentation for Kathmandu Holdings. My name is Xavier Simonet, and I am the CEO of the company. I'm joined on the call by Reuben Casey, our Chief Operating Officer; and Chris Kinraid, our Chief Financial Officer. We will be talking to the presentation slides on the NZX and ASX this morning. Most of the numbers are in our reporting currency, the New Zealand dollar, unless when it is specifically mentioned that they are in Australian dollars, U.S. dollars or British pounds.

If we go to Slide 3, financial highlights. Over the past 12 months, our team has delivered another record sales and profit results. We delivered record profits with EBIT up 12.7% to $84 million and net profit after tax, up roughly 13.6% to $58 million. Sales increased 9.7% to $545 million. The key drivers of this growth were a positive contribution from the Australian business, rapid sales and profit growth from Oboz in North America and increased penetration of the online channel in Australasia.

We were particularly pleased to grow sales in the second half of FY '19, even though we were cycling stronger strength in sales growth in our key winter period last year. Same-store sales in Australia were up 2.7%.

Oboz, the American outdoor footwear brand we acquired last year, was the key growth driver with sales up 30% and EBIT up nearly 39%. Oboz has clearly accelerated our transformation from being a leading Australasian retailer to becoming step by step a global brand-led multichannel business, and it has enabled us to diversify our channels, brands, products and geographies.

Last, with increased penetration, online accounts for 10.1% of direct-to-consumer sales, online sales have nearly reached a threshold of $50 million. I also want to highlight that we generated strong operating cash flow in the second half of the year and that our net debt level went significantly down from $31 million in FY '18 to $19 million in FY '19. A final dividend of NZD 0.12 per share has been declared, taking the full year dividend is NZD 0.16 per share, another record for Kathmandu.

Moving on to Slide 4, operational highlights. I'd like to call out a few key items on this slide. First of all, and I'll start from the bottom of the page, sustainability is in the DNA of Kathmandu, and we are very proud to have become a certified B Corp and pleased to have scored an 'A' in the ethical fashion report 2 years running. It's a key focus for our company.

Our loyalty program, Summit Club, which is an immensely powerful tool, continues to grow and has reached 2.2 million active members, up 12% on last year. We continue to invest heavily to upgrade our store network and provide the best customer experience.

In FY '19, we've been around $10 million for CapEx. In FY '19, we also launched Kathmandu in North America through 45 doors and 5 online sites with a focus on building up an authentic outdoor distribution network and authenticating our brand. Chris is going to talk about the financials.

--------------------------------------------------------------------------------

Chris Kinraid, Kathmandu Holdings Limited - CFO & Company Secretary [3]

--------------------------------------------------------------------------------

Thank you, Xavier. Just moving on to the P&L, Slide 6. As mentioned earlier, FY '19 was a record year in terms of revenue and earnings with sales growth accelerating with the inclusion of Oboz. Also pleasingly, costs have been well controlled as our business has expanded and operating leverage has benefited from our diversification into the wholesale channel. Net profit grew by 13.6%. Just to also caveat that, there was a one-off benefit of GST tax refund of $0.8 million after-tax impact.

Moving to Slide 7, the balance sheet. We were very pleased to be able to lower net debt near our FY '17 level, following the acquisition of Oboz at FY '18. This is also a heavy improvement on our debt to equity ratios. Also was the benefit of wholesale channel, fixed cover charge has strengthened to 2.35x cover.

Moving to operating cash flow. That was strong result for the year at $61.7 million. I just want to highlight the strong cash generation we achieved in the second half of $77.9 million, which lead to a $14 million reduction net debt.

Our working capital movements primarily related to inventory which was impacted by foreign exchange, by easing of new product launches and where we set with now with manageable clearance levels, especially following a strong Oboz sell-through for our units are now legal year-on-year.

On the CapEx, as Xavier previously mentioned, we continue to invest in optimizing our store network with $10.3 million CapEx on new stores, refurbishments and relocations, including a large portion of cost between 2 new flagship stores both opened in August in New Zealand. Growth-enabling investments include the finalization of our online platform upgrade and a new warehouse management system going live this year, supporting our digital strategy.

FY '20 investment is planned to be around $21 million as [we all have said,] we continue to invest in our systems capability to support our growth and our omnichannel strategic priority as well as our ongoing store refurbishment program.

On slide, dividend. The year-end dividend has been declared at $0.12 per share, bringing the full year dividend to a record payout of NZD 0.16 per share. This will be fully imputed for New Zealand shareholders and fully franked for Australian shareholders with an eligible record date of September 30.

On to sales. As Xavier mentioned previously, in FY '19, total company sales grew 9.7% to $545.6 million, reflecting our diversification strategy. Retail store channels grew at 1.3% across the network and online sales grew at 9.2%, now reflect a 10.1% of direct-to-consumer sales. And pleasingly, our North American market grew 28.2% on a pro forma basis, reflecting Oboz' strong growth half.

On to same-store sales on Slide 13. Australia continued to grow by well at 2.7%. That's pleasing following the strong growth we achieved last year, especially in our winter period promotions in FY '18. And New Zealand same-stores, as previously flagged, reduced by 3.9%.

On to Slide 14, gross margin. We have reported margin of 60.9%. However, this reflects the weighting of an increase wholesale contribution from North America, which achieved a margin of 40.8%. Kathmandu only margin was at 63.6%, and that's maintained above our long-term target of 61% to 63%.

We continue to manage our margin through designing products to achieve our gross margin requirement and through achieving sourcing percentage. However, inflationary pressures still remain with the raw materials and labor and there are currency pressures over the near term.

Then following the -- I guess moving on to foreign currency hedging slide. As previously communicated in our half year release, FY '20 gross margins will be impacted from our low hedging rate due to the appreciation of the U.S. dollar, which will affect a lot of the retail sector. Our USD hedging rates for FY '20 are approximately 6% below FY '19 and comparable to our FY '17 results.

And finally from me on to our cost of doing business. We continue to manage our cost structure well. Our costs down to 45.7% of sales, a strong continuing trend over the past 5 years for this business.

Rental cost grew lease and sales at 2.7%, with improved outcomes from -- with experience from our lease negotiations. And other operating expenses benefit from our careful management of our labor costs. Additional or incremental operating expenses came from the North American business of $11.8 million, which also included a $1.3 million investment in our North American setup for Kathmandu.

I'll now pass on to Reuben.

--------------------------------------------------------------------------------

Reuben Casey, Kathmandu Holdings Limited - COO [4]

--------------------------------------------------------------------------------

Thanks, Chris. Just to move on to Australia. As mentioned earlier, we cycled a really strong year in Australia last year, and we are really happy to get 4.5% increase in our top line there, 2.7% on a like-for-like basis. And we're really increasing our market penetration in Australia as was talked about in the past, but kind of short- to medium-term growth opportunity. And we can see that coming true, online growing strongly, particularly in the second half. And also a 14% increase in active Summit Club business in Australia, which is really underpinning the net growth. And we strongly believe that we need to provide a great customer experience across all channels and part of that is our retail store network. And so we continue to optimize that channel with 4 new stores opened, we closed 3 stores and refurbished 8 stores. And we'll continue to do that in the future.

In New Zealand, it was a tougher year. I mean it's a more mature market for us and more price-sensitive market as well. We did continue to grow strongly in our online channel, but it wasn't matched by sales in our retail stores. As acknowledged by the retailers, it's been a late start to winter in New Zealand which had an effect still on our June period. But we thought that will come back strongly later in July and definitely through August that has continued as well.

And one really good thing about our results was the team worked really hard to maintain our operating expenses, and we held our OpEx flat as a percent of sales despite the sales decline. And also, we're still focusing on customer experience and conversion. They remain key metrics for our team, and we will continue to invest in the New Zealand market. We opened 2 flagship stores in Christchurch CBD and new market opened in the last month, and we will continue trying to elevate the brand experience in New Zealand.

Moving on to online. It's a critical channel for us and it remains our fastest growing channel. Online sales grew strongly once we completed our replatforming, which we finalized in February of this year. We're seeing an increased traffic and also increased conversion which really is supporting our online business 10% (sic) [10.1%] of direct-to-consumer sales. And we'll keep improving and investing in our online experience as we go forward.

Moving on to North America. As Xavier mentioned earlier, we're really happy with how we managed to successfully integrate Oboz with the group and all the while we still managed to deliver a 30% revenue growth on a pro forma basis, like-for-like basis.

Oboz has got a really strong core business and they upgraded one of their key franchise [assortment] during the year which is a successful launch across REI and also across Independence. And also in North America, we set up the Kathmandu business so we hired a VP of Sales and Marketing, made the foundation for the year to come and we got orders for 45 doors which start to ship in August -- or started to ship in August this year. And then we'll go -- we're building this foundation for the year ahead. And I'll pass back to Xavier.

--------------------------------------------------------------------------------

Xavier Simonet, Kathmandu Holdings Limited - MD, CEO & Executive Director [5]

--------------------------------------------------------------------------------

Thanks, Reuben. Moving on to Slide 22, strategy and outlook. And strategically, we are on the journey of transformation, transformation from being a leading Australasian retailer to becoming step by step a brand-led global multichannel business. And one key aspect of our transformation journey is our commitment to sustainability. Reuben?

--------------------------------------------------------------------------------

Reuben Casey, Kathmandu Holdings Limited - COO [6]

--------------------------------------------------------------------------------

Thank you. Sustainability, we view as a thread that runs through all of our business and it's just so integral to our culture. And we have quite a lot of excited team members when we originally announced the B Corp certification which is something we're working on for some time, and it's a real commitment for our team and customers in terms of our future -- of future ethical practices and what really is a conduit of best practice sharing as we moved forward.

I've also listed out sustainability goals in line with the UN 2025 framework. I won't go through all of them. But one of the areas which we -- the team has really talked about is things like circular economy principles. It's a really big challenge for brands and retailers to fit a lot of their products through either reuse or recycling. No one is really nailing this at the moment. So we're really excited about the challenge and to see what we can do here. And as we often said, we always wanted people proving out sustainability and internally we talked about not being the best in the world, but being the best for the world.

--------------------------------------------------------------------------------

Chris Kinraid, Kathmandu Holdings Limited - CFO & Company Secretary [7]

--------------------------------------------------------------------------------

Thank you. Moving on to Slide 24 and 25, Kathmandu's competitive advantages. And I'd like us to step back for a minute and highlight, in a nutshell, Kathmandu's competitive advantages. Over the last 4 years, we have demonstrated our ability to deliver sustainable sales and profit growth and create value for our shareholders. In terms of sales, our 4-year sales CAGR has been strong at 7.4%, EBIT 4-year CAGR has been 26.2%. Throughout this period, we have maintained strong gross margins through balanced promotional activity.

In regards to cash flow, we have delivered over $250 million of operating cash flows and over $100 million of dividend have been distributed to shareholders. Last but not least, the acquisition of Oboz has provided a pathway for sustainable international growth. I'd also like to emphasize that Kathmandu is after all a product and brand-led business. Our mission is to design original, sustainable, engineered and adaptive products. As a brand, we have the strongest brand presence and awareness in the Australian outdoor consumer markets.

On Slide 25, well, our loyalty club, Summit Club, has been, over the years, a very key asset in terms of customer penetration, engagement and retention. Summit Club has now more than 2.2 million active members and accounts for 70% of Kathmandu sales. Summit Club members are aligned with our key values of sustainability and they're passionate for travel and adventure. They spend around 30% more per transaction than nonmembers.

The significant sustainable growth we have enjoyed as a company also reflects the success of our omnichannel approach. For the first time, the online channel accounts this year for over 10% of our direct-to-consumer sales to nearly $50 million. Our strategy is channel agnostics and customer centric. Through our 165 brick-and-mortar stores in Australia and New Zealand and our online shops, we give our customers a choice of channels and offer them the opportunity to engage and transact with Kathmandu 24 hours a day, 7 days a week.

To achieve a successful omnichannel strategy and informed customer experience between all channels, we continue to heavily invest year after year in new infrastructure and systems.

If we move on to Slide 26, strategy for the next 3 years. Moving forward, our -- 2 of our chief objectives are to continue driving sustainable profitable growth but also to diversify our company. So we've articulated our 4 key growth strategies on Page 26.

Our first strategy is to continue driving sales and profit growth in our core markets, Australia and New Zealand, by Supercharging Summit Club, which means building a highly engaged membership club, by becoming the preferred destination for some other products, by elevating key metro markets where we see significant potential for growth and by enhancing store optimization, which means maximizing gross profit per square meter.

Our second strategy is to acknowledge that we are a product and branded company with the requirement to win with distinctive products. And we'll be executing on 3 strategic initiatives related to product: first, extend leadership in key product categories, especially through innovation and sustainability; second, accelerate growth in high potential categories and hence diversify our business; and last, scale the women's opportunity. We have indeed a position to take as a leader in empowering women to live a life of travel and adventure.

Leveraging the digital opportunity by enhancing the customer experience through digital is our third strategy. It means the following: making it easy for customers, particularly in terms of fulfillment and payment options; leveraging digital media platforms to enhance the impact of our brand and product messages; and maximizing mobile with customers and bridging the online and off-line experience.

Our fourth ambition and strategy is to become step-by-step a more global business. And we have a dual challenge there, which is to build the Kathmandu brand and create an awareness in North America and internationally, as well as opening routes to market through 2 commercial channels, wholesale and direct-to-consumer online.

In order to achieve our strategic objectives, a fundamental enabler is our ability to inspire and empower the Kathmandu and Oboz team by being the best possible [employing] and by having a great culture focused on our key values.

Moving on to Slide 27, key strategic priorities in FY '20.

Well, we have articulated our key strategic priorities for the current year FY '20, and these key priorities are all connected to the strategic plan we have defined. And I'm not going to go through the whole slide.

I wanted to particularly call out the investments we're making in FY '20 to implement a merchandise planning system and a warehouse management system that will enable future store optimization.

So on Slide 18 -- on Slide 28. Sorry.

As a summary, I'd like to say that our entire team is very proud to have delivered 4 years of innovative products, sustained sales and profit growth, strong operating cash flow and significant value for our shareholders. In Kathmandu and Oboz, we have 2 distinctive brands with strong fundamentals and significant international growth potential.

And as a conclusion, I want to give a trading update, and I'm pleased to report that we have experienced a strong start to FY '20. For the first 7 weeks of FY '20 ending on the 15th of September, same-store sales growth at constant exchange rate has been 6.1% for our group, with both Australia and New Zealand performing well. Australia at plus 4% and New Zealand at plus 11.7%.

I need to say though that this initial 7-week period of FY '20 is not a meaningful period of trading in the context of the first half of the year.

So thanks very much for joining the conference call this morning and I now invite questions.

================================================================================

Questions and Answers

--------------------------------------------------------------------------------

Operator [1]

--------------------------------------------------------------------------------

(Operator Instructions) Your first question today comes from Andrew Steele with Jarden.

--------------------------------------------------------------------------------

Andrew Steele, Jarden Limited, Research Division - VP of Equity Research [2]

--------------------------------------------------------------------------------

The first one from me is just on the wholesale orders you've got into the FY '20 year. I guess that it's a little bit of hard to give a sense to the potential sales impact from that. Can you give some sort of depth how we should think about the potential quantum from these orders for the period?

--------------------------------------------------------------------------------

Reuben Casey, Kathmandu Holdings Limited - COO [3]

--------------------------------------------------------------------------------

Yes. We haven't disclosed the extra number. And it's fair to say that it's at $45, it's not hugely material, and -- but the key thing is it's a start. And typically, what we were trying to do was drive sales that are going to get repeat orders, so that could obviously -- the amount can grow through repaying the orders throughout the season and also build on those initial sell-throughs to get repeat orders for the subsequent season.

--------------------------------------------------------------------------------

Andrew Steele, Jarden Limited, Research Division - VP of Equity Research [4]

--------------------------------------------------------------------------------

Okay. And also throw out some numbers, the sort of less than $10 million potential impact at this stage or greater than that, or you still don't...

--------------------------------------------------------------------------------

Reuben Casey, Kathmandu Holdings Limited - COO [5]

--------------------------------------------------------------------------------

Yes. As I said, we haven't disclosed it, but it's not material. So...

--------------------------------------------------------------------------------

Andrew Steele, Jarden Limited, Research Division - VP of Equity Research [6]

--------------------------------------------------------------------------------

Okay. Great. And is there further investment required to support, this business next year in terms of a P&L impact?

--------------------------------------------------------------------------------

Reuben Casey, Kathmandu Holdings Limited - COO [7]

--------------------------------------------------------------------------------

Potentially. As the business grows, we would like to be mark the company for more resources to support the business. But we'll split it up with the sales rep structure, so it should be scalable from that point of view. But yes, certainly, as the business grows, [it'll require] probably some extra support.

--------------------------------------------------------------------------------

Andrew Steele, Jarden Limited, Research Division - VP of Equity Research [8]

--------------------------------------------------------------------------------

Okay. That's clear. And then just on the New Zealand market, and I guess, I'm sure from your perspective, it's a little bit disappointing, the negative same-store sales results 2 years in a row and that there has been I guess some impact from reduced discounting activities. Do you feel that you've actually reached the price point in the New Zealand market and it should be returning to growth this year? Or is there some other dynamics at play which could weigh on same-store sales performance?

--------------------------------------------------------------------------------

Reuben Casey, Kathmandu Holdings Limited - COO [9]

--------------------------------------------------------------------------------

I think it's fair to say we're always trying to drive growth at New Zealand. That's not something we are shying away from. And yes, you're right, it's a bit disappointed not to get that growth coming through. We -- still, we have done what we can on price points and we'll certainly be trying to drive growth this year. I mean it really comes down to -- it all comes down to focusing on things that we can control. So elevating the brand experience, making better products. We have a kind of better not cheaper type of mantra. So those are the things that we can control and we'll continue to focus on that.

--------------------------------------------------------------------------------

Andrew Steele, Jarden Limited, Research Division - VP of Equity Research [10]

--------------------------------------------------------------------------------

Okay. Great. And then just the last one for me. It's just on accounting gross margins. You've helpfully provided the hedging rates into the year ahead and highlighted, I think, roughly 7% lower rates than last year. Could you provide some sort of context on your [rollout] that you called the potential gross margin impact from the currency shift?

--------------------------------------------------------------------------------

Chris Kinraid, Kathmandu Holdings Limited - CFO & Company Secretary [11]

--------------------------------------------------------------------------------

Yes. But it did impact, specifically, on the foreign exchange rate. But equally, we do have some offsetting activities to partially mitigate that in terms of driving our [principles into most] players and our product creation to manage that. But I guess the hedging rates are similar towards FY '17, so that's a reasonable guidance towards [levels.]

--------------------------------------------------------------------------------

Andrew Steele, Jarden Limited, Research Division - VP of Equity Research [12]

--------------------------------------------------------------------------------

Okay. And so you would expect in terms of the gross margin, the result being on the retail business to be similar to that year?

--------------------------------------------------------------------------------

Chris Kinraid, Kathmandu Holdings Limited - CFO & Company Secretary [13]

--------------------------------------------------------------------------------

Potentially.

--------------------------------------------------------------------------------

Andrew Steele, Jarden Limited, Research Division - VP of Equity Research [14]

--------------------------------------------------------------------------------

Okay. Great. And then, sorry, just one final one for me. I guess you produce a similar level of cash generation in the FY '20 period, you're going to be looking at pretty much being close to debt-free or very close to net cash.

What is your thinking as a management team as to how you'd like to deploy balance sheet capacity? Are you on the lookout for further bolt-ons? Is it -- so the return of capital to shareholders is also something on the radar as well as we get through the course of the year?

--------------------------------------------------------------------------------

Reuben Casey, Kathmandu Holdings Limited - COO [15]

--------------------------------------------------------------------------------

Yes. I think as we talked about in the past, we don't have a specific M&A strategy. But certainly, if there was an M&A that came up that was a good opportunity, we'd look at it, provided it made strategic sense and added value for shareholders.

In terms of a capital management question, that's really -- yes, we have options up into that, so we'll explore those as they become relevant.

--------------------------------------------------------------------------------

Operator [16]

--------------------------------------------------------------------------------

Your next question comes from Guy Hooper with Forsyth Barr.

--------------------------------------------------------------------------------

Guy Edward Harding Hooper, Forsyth Barr Group Ltd., Research Division - Analyst of New Zealand Equities [17]

--------------------------------------------------------------------------------

Just a couple of questions from me. The first one, can you give a sense on what was I suppose the key drivers of the underlying Oboz or the pro forma Oboz performance?

--------------------------------------------------------------------------------

Reuben Casey, Kathmandu Holdings Limited - COO [18]

--------------------------------------------------------------------------------

Yes. Oboz is a really strong core business. So that -- they've got 2 key franchises, and they already launched one of those franchises this year, so that was your -- provided some good growth. They continue to grow very strongly with REI and -- but also, actually, they grew stronger with customers outside of REI, especially through the independent outdoor channel.

And one channel that's been developing over the last 2 or 3 years is shoe stores. So you get independent or chains of shoe stores who sell and offer our outdoor footwear. So that's been growing into that channel as well quite strongly during the year. And lastly, that had some good success with diversifying their product range into things like insulated products, which have gone really well for them. It helped -- actually helped them expand their share of women's business.

--------------------------------------------------------------------------------

Guy Edward Harding Hooper, Forsyth Barr Group Ltd., Research Division - Analyst of New Zealand Equities [19]

--------------------------------------------------------------------------------

Great. Just on -- I suppose as your guidance for FY '20 CapEx, around $21 million. Can you just provide any breakdown on what this is a map for? I suppose an update on the store portfolio mix or store count targets for the next couple of years.

--------------------------------------------------------------------------------

Chris Kinraid, Kathmandu Holdings Limited - CFO & Company Secretary [20]

--------------------------------------------------------------------------------

Yes. In terms of that mix, it's relatively even weighted between stores and systems, a lot of retail store network and systems. And it is [earlier said], some of this going on, and continuing with WMS and our merchandise planning system, and looking forward to ERP system opportunities as well.

In terms of store targets, it's -- we don't from this point have a defined store target. I guess if these opportunities exist, we'll look to do those if there was. And also, we have a defined program of stores, which should rolling up their leases where we look to refit those at that point in time.

--------------------------------------------------------------------------------

Guy Edward Harding Hooper, Forsyth Barr Group Ltd., Research Division - Analyst of New Zealand Equities [21]

--------------------------------------------------------------------------------

Yes. Great. I suppose just one last kind of general one from me. It's pretty strong trading into the beginning of FY '20. Can you -- I suppose with consumer confidence levels are and wage pressures, I suppose increasing competition, give us a sense of how you're feeling heading into FY '20 for this year?

--------------------------------------------------------------------------------

Reuben Casey, Kathmandu Holdings Limited - COO [22]

--------------------------------------------------------------------------------

Yes. We don't give guidance. Obviously that's a guide. But it's a small period of the year, so perhaps 7 weeks and that's smallest quarter, so just going to make sure we context it in that in that light. But yes, happy with how we started, which is a positive start, and we'll look to build on that as far as we can. Looking out the window right now in Sydney, it's certainly pouring with rain. So it's going to be good for rain week sales [and the base...]

--------------------------------------------------------------------------------

Chris Kinraid, Kathmandu Holdings Limited - CFO & Company Secretary [23]

--------------------------------------------------------------------------------

Yes. I think we're pleased with the new range of introduction. The summer has performed and [in some cases, performing] well.

--------------------------------------------------------------------------------

Operator [24]

--------------------------------------------------------------------------------

(Operator Instructions) Your next question comes from [Sameer Patel] with [Ath Guilden.]

--------------------------------------------------------------------------------

Unidentified Shareholder, [25]

--------------------------------------------------------------------------------

Shareholder from the U.S. here. A couple of questions. So one is, do you -- is it too early to talk about sell-through data from North America, or do you not have that kind of stuff yet?

--------------------------------------------------------------------------------

Reuben Casey, Kathmandu Holdings Limited - COO [26]

--------------------------------------------------------------------------------

Yes. It's too early. I mean we just shipped them. Overall, that's in -- so, I mean, there's some anecdotal feedback I could provide, but it's too early, really.

--------------------------------------------------------------------------------

Unidentified Shareholder, [27]

--------------------------------------------------------------------------------

Okay. Fair. On Oboz, do you guys have a sense for where Oboz is in its growth trajectory? I mean do you expect it to continue to be able -- I know you don't give guidance. But just generally speaking, do you expect to continue to be able to drive double-digit growth there over the near to medium term?

--------------------------------------------------------------------------------

Reuben Casey, Kathmandu Holdings Limited - COO [28]

--------------------------------------------------------------------------------

Yes. We do. Yes. I suppose we're growing strongly for the last 5 years. And I mean I suppose the platform of growth was slightly lower than what it was the prior year, but we do a step back to kind of gradually moderate over time. But certainly, we think there's opportunity to keep driving double-digit growth for sure.

--------------------------------------------------------------------------------

Unidentified Shareholder, [29]

--------------------------------------------------------------------------------

Okay. Cool. And then final question. In the core Australia-New Zealand business, I know you guys had previously talked about the currency and some other kind of cost headwinds affecting the gross margin. Do you have a sense for kind of where those end up in fiscal '20 or is that again something not -- you're not going to give guidance on?

--------------------------------------------------------------------------------

Reuben Casey, Kathmandu Holdings Limited - COO [30]

--------------------------------------------------------------------------------

Yes. We don't normally give specific guidance on that.

--------------------------------------------------------------------------------

Operator [31]

--------------------------------------------------------------------------------

(Operator Instructions) There are no further questions at this time. That does conclude our conference for today. Thank you for participating. You may now disconnect.

--------------------------------------------------------------------------------

Xavier Simonet, Kathmandu Holdings Limited - MD, CEO & Executive Director [32]

--------------------------------------------------------------------------------

Thank you.

--------------------------------------------------------------------------------

Chris Kinraid, Kathmandu Holdings Limited - CFO & Company Secretary [33]

--------------------------------------------------------------------------------

Thank you.