Adventure gear retailer Kathmandu says its half year performance will depend heavily on the Christmas trading period as it sales growth has come under pressure.
The company expects its profit in the six months to the end of January will be unchanged from the same period last year, as it looks to carefully manage margins and expenditure to offset the effect of slowing sales.
In the 15 weeks to November 13, its sales were down 0.6 per cent from the same period a year ago.
Excluding the impact of currency movements, total sales were up 2.8 per cent, and same store sales rose by only 1.4 per cent, much slower than the 4.8 per cent growth achieved 12 months earlier.
"In response to the strengthened US dollar, we have been less promotional in the first quarter," chief executive Xavier Simonet told the company's annual general meeting on Friday.
"Combined with a higher mix of clearance and cycling UK store closures, this has impacted on sales in the first 15 weeks."
Kathmandu has improved its working capital position, with lower net debt and stock per store than the same time last year, he said.
"As always our first half year result is highly dependent on the more significant Christmas trading period."
The second quarter of its fiscal year typically contributes about 30 per cent of Kathmandu's sales.
Chairman David Kirk told shareholders there remains opportunities to open more stores in Australia, while also driving growth through a range of online channels. He said the company also continues to pursue international growth opportunities without opening physical stores.
Kathmandu shares dropped by as much as 6.8 per cent on Friday, and at 1225 AEDT were down eight cents, or 4.5 per cent, at $1.69.
