While sales soared 15.4 per cent to NZ$146.7 million, Kathmandu’s net profit after tax is down to nearly half of what it was this same period last year.

In its first half-year results show that NPAT has dropped 42.9 per cent to NZ$6 million. Similarly, its earnings before interest and tax has decreased by 36.2 per cent to NZ$12.7 million.

Kathmandu CEO Peter Halkett said sales over the period were very strong but this was achieved at lower gross margins and incurred higher costs.

“Following slow Christmas trading, more aggressive promotional and marketing activity was undertaken during January to maximise profits and rate of inventory sell-through. Additionally net profit was impacted by one off costs associated with our core system upgrade and our brand refresh project,” he said.

In the first half year of FY12 same store sales growth was 8 per cent while online sales growth was up over 50 per cent on the same period last year, but still was only a small portion of this increase.

New Zealand outperformed Australia in same store sales growth, consistent with reported retail statistics for each country. Kathmandu’s relative sales performance in Australia has generally been weaker in those states not directly benefitting from activity in the resource sector.

Halkett also noted: “Our UK sales shortfall was primarily in December, which was not surprising given it was a month which in 2010 was both one of the coldest ever Decembers on record, and just prior to the VAT increase to the current 20 per cent level.”

The company will continue to invest in new store openings, inventory and aggressive marketing but it second half-year performance will rely heavily on its Winter sale.

“Sales improvement in the period post-Christmas has continued since the end of January, but two of our three largest promotional events of the year are still to come which impact the possible range for the full year result,” Halkett said.