Announcement

MKTUPDTE: KMD: COVID-19 Market Update 09:20a.m. 
KMD  
27/03/2020 09:20  
MKTUPDTE  
PRICE SENSITIVE  
REL: 0920 HRS Kathmandu Holdings Limited  
 
MKTUPDTE: KMD: COVID-19 Market Update  
 
KATHMANDU HOLDINGS LIMITED  
 
ASX / NZX / MEDIA ANNOUNCEMENT  
 
27 March 2020  
 
Kathmandu Holdings Limited (ASX / NZX code: KMD) continues to actively  
monitor the rapidly changing impact of COVID-19 (coronavirus) on its  
businesses in its various key trading markets and is working across all  
geographies and business operations to pre-emptively manage the situation.  
The health and safety of the Group's employees, customers and the broader  
community continues to be the Group's highest priority.  
 
Operations and commercial channels  
- All of the Group's major head offices are closed with staff working from  
home, in line with government regulation or generally accepted best practice  
around the world, to minimise the spread of the virus.  
- All New Zealand retail stores and distribution centres were closed on 24  
March in advance of the lockdown that commenced on 25 March and will continue  
for a period of at least 4 weeks, as mandated by the New Zealand Government.  
 
- The Group is in the process of closing its Australian retail network by  
5:00 pm today reflecting the need to ensure the health and safety of staff  
and customers, the rapidly declining footfall and social distancing measures  
that have been imposed by the Australian Government.  
- Other key regions including Brazil, North America and Europe are in a  
similar situation with stores, wholesale customers and offices closed due to  
government mandated closures or lockdowns.  
- Online retail in Australia, Europe and the USA continues. In accordance  
with guidance from the New Zealand Government, online distribution in New  
Zealand has been suspended.  
 
Cost savings and structural cost reductions  
1. The Group is taking decisive and immediate action on significant cost  
savings and structural cost reductions, aided by government contributions and  
supplements to employee incomes where available. In particular:  
- In New Zealand, applications are underway to access the government wage  
subsidy for employees.  
- In Australia, retail store and head office staff with the exception of a  
skeleton crew, will be stood down, without pay for 4 weeks, but with access  
to government assistance and leave entitlements.  
- During the lockdown in France, the base of Rip Curl's European operations,  
and other European countries, employers are able to temporarily release staff  
while government funds the majority of employee salaries.  
- Employment is largely on an "at will" basis in North America allowing for  
efficient right sizing of the business in that region.  
 
2. Aggressive cost saving initiatives have or will be implemented to manage,  
where possible, expenses and cashflow in line with sales performance.  
Measures taken or planned include:  
- Landlord partners have been engaged in negotiation to achieve a fair rental  
outcome that sees the Group's rental costs aligned to sales performance.  
- Existing inventory orders have been reviewed with aggressive levels of  
cancellations made based on reduced demand levels.  
- All operating expenses have been challenged aggressively for potential  
savings.  
- Planned capital expenditure has been cancelled or deferred.  
- Senior management across all brands have agreed a 20% salary reduction  
until further notice.  
- Use of casual staff in retail networks and warehouses has ceased in all  
regions in response to reduced demand in recent weeks.  
- We are consulting with employees around options for team members to  
continue on a reduced hours and salary basis.  
 
3. The Group is implementing the structural changes necessary to conserve  
liquidity and streamline the business during this period of unprecedented  
challenge, whilst recognising the legal requirements and processes of the  
many jurisdictions in which it operates. Further updates will be made as  
necessary.  
 
Dividend and Interim Results  
Like many other companies, the Board is reviewing the Group's outlook and  
capital structure in the light of the COVID-19 situation. The Board has also  
taken the prudent decision to suspend dividend payments until after such time  
as more normal trading conditions resume.  
 
In reliance on a waiver issued by NZX, the Group's half year results  
announcement (including preliminary financial statements) for the six months  
ending 31 January 2020 is now expected to be released by no later than Friday  
3 April 2020, instead of Monday 30 March 2020 as previously advised.  
 
While COVID 19 had minimal impact on earnings for the six months ending 31  
January 2020, there is likely to be a material adverse impact to earnings in  
the second half of this fiscal year.  
 
Kathmandu Holdings' Group CEO Xavier Simonet commented "Our total focus is to  
protect the health and wellbeing of our teams and customers and ensure  
business continuity. I am so grateful to all our teams around the world for  
their resilience in this situation of uncertainty and challenges."  
 
ENDS  
 
This announcement has been authorised for release by the Board.  
 
For further information, please contact:  
Media  
Helen McCombie  
Citadel-MAGNUS  
Tel: + 61 2 8234 0103  
 
Investors  
Eric Kuret  
Market Eye  
+61 417 311 335  
End CA:00350801 For:KMD Type:MKTUPDTE Time:2020-03-27 09:20:10  

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