What Happened to the Kathmandu Holdings Share Price?
Shares in outdoor clothing retailer Kathmandu Holdings Ltd [ASX:KMD] copped a whipping today, sinking by more than 12% in a flat market. Kathmandu is now retesting the lows to which its share price sank in February.
Why Did This Happen to KMD Shares?
This morning Kathmandu became the latest retailer to confess to lower profit expectations. The company took a razor to its prior guidance and told the market that its earnings may slump by as much as 15% in the year ending next week.
Kathmandu’s CEO Peter Halkett blamed unseasonably warm weather for the disappointing sales, with the shortfall ‘particularly significant in the past fortnight’.
What Now For Kathmandu Holdings Ltd?
Well, we already knew that it was a warm winter. That’s why the market seemed to factor in a large chunk of this downgrade ahead of time.
Kathmandu shares have now lost more than 22% of their value in the past seven weeks. Over this period, several other retailers lowered their profit expectations because of unfavourable weather and souring consumer sentiment.
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That tells me that most of the selling pressure on Kathmandu could be finished now that its confession is in the market.
If the critical July period sees any improvement in sales, this stock could stage a real turnaround. That makes it worth considering this pullback as a potential buying opportunity.
Tim Dohrmann+
Small-Cap Analyst, Australian Small-Cap Investigator
