Kathmandu holding Limited is an outdoor retailer specialist company which is involved in the retailing, designing and marketing of clothes and manufacture equipment both for traveling and adventurous trip. The Company is operational in Australia, New Zealand, and the UK. The Company is offering a variety of clothing which includes waterproof jackets, down jackets and other products. The Company has 108 operational stores in Australia, 45 operational stores in New Zealand and 5 operational stores in the U.K. The Company’s affiliates companies include Milford Group Holding Limited, Kathmandu Limited. Kathmandu Pty Limited and Kathmandu (UK) Limited respectively.
Sales Analysis:
Kathmandu Holdings Limited stated the sales of 425.59 million New Zealand Dollars (US$307.51 million) for the financial year finishing July of 2016. This signifies an increase of 4.0% then in 2015 when the company’s sales were 409.37 million New Zealand Dollars. Sales at Kathmandu Holdings Limited have improved during each of the preceding five years (and since 2011, sales have increased a total of 39%). This increase in sale results in the increase of share price, total assets and revenue for the company as shown in the below graph. (“Kathmandu Holdings Ltd, KMD: NZC financials – FT.com,” n.d.)
Key Ratios of the Company:
The Company is performing outstandingly in the last five years. Sales are increasing which results in the increase of share price and an overall increase of the assets. Below are few tables that are representing the key ratios of the company from 2014 to 2016.
The Ratio of Sales of the Company
| Margins % of Sales | 2014-07 | 2015-07 | 2016-07 |
| Revenue | 100 | 100 | 100 |
| COGS | 36.85 | 38.47 | 37.41 |
| Gross Margin | 63.15 | 61.53 | 62.59 |
| SG&A | 62.9 | 70 | 66.9 |
| R&D | — | — | — |
| Other | -15.75 | -16.56 | -16.27 |
| Operating Margin | 16.01 | 8.1 | 11.96 |
| Net Int Inc & Other | -0.82 | -0.66 | -0.84 |
| EBT Margin | 15.18 | 7.43 | 11.12 |
The ratio of the profit of the Company
| Profitability | 2014-07 | 2015-07 | 2016-07 |
| Tax Rate % | 29.35 | 32.9 | 29.17 |
| Net Margin % | 10.73 | 4.99 | 7.88 |
| Asset Turnover (Average) | 1 | 0.98 | 1.01 |
| Return on Assets % | 10.75 | 4.87 | 7.95 |
| Financial Leverage (Average) | 1.35 | 1.37 | 1.34 |
| Return on Equity % | 14.14 | 6.64 | 10.77 |
| Return on Invested Capital % | 12.94 | 5.94 | 9.78 |
| Interest Coverage | 13.3 | 8.25 | 14.21 |
Source: ( (“Results & Reports,” 2012)
The Ratio of the balance sheet of the Company:
| Balance Sheet Items (in %) | 2014-07 | 2015-07 | 2016-07 |
| Total Current Assets | 28.1 | 30.75 | 25.98 |
| Other Long-Term Assets | 1.59 | 0.92 | 2.49 |
| Total Assets | 100 | 100 | 100 |
| Short-Term Debt | 0.06 | 0.01 | — |
| Other Short-Term Liabilities | 7.68 | 7.3 | 11.44 |
| Total Current Liabilities | 10.64 | 10.62 | 14.48 |
| Long-Term Debt | 15.3 | 16.49 | 10.57 |
| Long-Term Liabilities | 0.05 | 0.11 | 0.15 |
| Total Liabilities | 26 | 27.21 | 25.2 |
| Total Stockholders’ Equity | 74 | 72.79 | 74.8 |
| Total Liabilities & Equity | 100 | 100 | 100 |
Source: ((“OrotonGroup Ltd, ORL:ASX historical prices – FT.com,” n.d.)
Ratio of the financial health of the company
| Liquidity/Financial Health | 2014-07 | 2015-07 | 2016-07 |
| Current Ratio | 2.64 | 2.89 | 1.79 |
| Quick Ratio | 0.25 | 0.42 | 0.2 |
| Financial Leverage | 1.35 | 1.37 | 1.34 |
| Debt/Equity | 0.21 | 0.23 | 0.14 |
Oroton Group Limited
OrotonGroup Limited is an Australian founded selling company. The Company’s segments include Oroton and Gap products. The Company is involved in the selling of leather products, fashion apparel, and other products under the OROTON product name. It is engaged in the selling of fashion clothing under the GAP label. It is also involved in certifying of the OROTON product name. The Company runs 80 stores in Singapore. China, Australia, New Zealand and Malaysia.(“OrotonGroup Limited – Retail,” n.d.)
Key Ratios of the Company
Oroton Group has made a10 years of the franchise agreement with GAP in 2013 so that they can open new stores and could increase the share in casual clothing market of Australia.
OrotonGroup’s GAP stores are in severe losses and lost an estimated amount of 1.3 million dollars in 2015 and 0.5 million dollars in 2016. It is expected that sales will decline by up to 10% in 2017 and the company has to bear the loss of 67.1 million dollars this year. This loss will mainly due to the low sales at stores at stores
Oroton’s same-store trades were declined for up to 11 per cent as compared to the 11 per cent increase in the previous corresponding period, while GAP same-store trades has fallen up to 12% as compared to 6.4 per cent increase in the previous year.
Financial Summary of the Company
| 2016 | 2015 | ||
| Year to 30 July 2016 – Reported | $’000 | V000 | % change |
| Starting | 136. | 132. | •3.3% |
| EBITDA°’ | 13. | 11. | +18.6% |
| EBITQl | 6. | 6. | +10.5% |
| Net profit after taxation | 3. | 2.620 | +31.4% |
| Earnings per share (EPS) (cents) | 8. | 6. | +31.5% |
| Dividend per share (cents) | 9.00 | 6.50 | +38.5% |
| Net (debt) / cash | 2816 | (6.) |
Source: ( (“OrotonGroup Ltd, ORL:ASX historical prices – FT.com,” n.d.)
Total Assets of the Company:
| Note | Consolidated 2015 $1000 |
|
| 2016 $’000 |
||
| Assets Current assets |
||
| Cash and cash equivalents 7 | 3. | 2. |
| Trade and other receivables 8 | 5. | 7. |
| Inventories 9 | 31. | 38. |
| Derivative financial instruments 10 | 989 | 9. |
| Tax receivable 11 | 381 | 140 |
| Total current assets | 40,288 | 56,393 |
| Non-current assets | ||
| Receivables 12 | 2. | |
| Derivative financial instruments 13 | 4. | |
| Property, plant and equipment 14 | 10,814 | 15. |
| Intangibles 15 | 1,070 | 671 |
| Deferred tax 16 | 3,542 | |
| Total non-current assets | 15. | 22. |
| Total assets | 55,714 | 78.150 |
The Company earning and growing ratios:
| Earnings | P/E Ratio | P/B Ratio | P/E Growth | |
| Company | 0 | 5.41 | 0.95 | 0 |
| Market | 1.12 | 17 | 1.48 | 1.78 |
| Sector | 0.54 | 14.2 | 1.52 | 1.88 |
Comparisons of KMD Kathmandu and Oroton Group Limited:
KMID Kathmandu is financially very strong as compare to Oroton Group Limited because its sales are continuously increasing for the last five years (5% increase of sale in last year), It assets are continuously increasing with the increase of sales whereas the sales of Oroton Group Limited is declining for the last many years. Company’s earnings are 0 and there sales ‘strategy is miserable failed which results in the loss of the company. The company is making new sale’s strategy with new products to attract young customers and introducing colorful and less expensive handbags, jewelry, watches, key chains, fragrances and other products.
The main focus of the company is to grow the Oroton brand by rebalancing outlet stores and by resetting the GAP brand and supporting the growth of Oroton’newest business.
Appendix
Net Profit
The Net profit of a company is the total profit gained by the company after all the expenses including interests; taxes and depreciation are deducted from the total revenue. It is also referred as net income or net earnings. The formula to calculate the net profit is shown below
Net Profit = (Net Income) / (Sales Revenue)
Asset turnover ratio
The assets turnover ratio is a ratio that measures the ability of the company to makes sales from its assets while comparing the net sales with the average of entire assets. It can also be defined as the how efficiently the company has the ability to use its assets to generate the sales.
Asset Turnover Ratio = (Total sales of the company) / (Average Total Assets).
The current ratio
The current ratio is the ratio that is used to analyses and examine the liquidity of the company and to measure the payable short term liabilities and the total short term assets. This financial ratio is used by the investors and analysts.
Current Ratio = (Total current assets of the company) / (Total Current Liabilities)
The quick ratio
The quick ratio is defined as the liquidity ratio that examines and measures how much is the company capable of paying the current liability. Quick assets are the assets that cannot be cashed in 90 days or in short period of time.
Quick Ratio = (Total Cash + Total Cash Equivalents + total short term investments + total Current Receivables) / (total Current liabilities of the company).
Debt ratio
Debt ratio is the ratio that defines the fraction of company’s assets that are provided by mean of debt or loan
Debt ratio = (Total Debts) / (Total Assets)
Bibliography
Kathmandu Holdings Ltd, KMD: NZC financials – FT.com [WWW Document], n.d. URL https://markets.ft.com/data/equities/tearsheet/financials?s=KMD:NZC (accessed 8.30.17).
OrotonGroup Limited – Retail [WWW Document], n.d. URL https://www.ibisworld.com.au/australian-company-research-reports/retail-trade/orotongroup-limited-company.html (accessed 8.30.17).
OrotonGroup Ltd, ORL:ASX historical prices – FT.com [WWW Document], n.d. URL https://markets.ft.com/data/equities/tearsheet/historical?s=ORL:ASX (accessed 8.30.17).
Results & Reports, 2012. Kathmandu Invest. Cent.
