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Kathmandu lifts sales by nearly 20%

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MELBOURNE, Nov 16 AAP

November 16 2012, 3:45PM

Clothing and camping equipment store Kathmandu has surprised the market with a dramatic jump in sales, in a positive sign for retailers approaching Christmas.

The Australasian company posted a 19.5 per cent boost in sales ($66.9 million) from its 126 stores for the 15 weeks to November 11, compared to the same period last year.

Same-store or comparable sales - excluding new stores - grew by 14.3 per cent during the period (13.6 per cent excluding currency movements) compared with 7.6 per cent in the same period last year.

The company's shares shot up on the news, increasing by nine cents at $1.44 by 1545 AEDT.

They are up 10 per cent for the year.

There is cautious talk of an improvement in Australia's long-struggling retail sector following months of weak results, with Country Road and Myer having both posted positive trading updates on Thursday.

The Westpac/Melbourne Institute's monthly index of consumer confidence this week showed that for the first time since February consumers were more optimistic than pessimistic about the economy.

CommSec economist Savanth Sebastian said that if those results were sustained over the new few weeks it would provide a degree of support for Christmas retail spending.

Kathmandu chief executive Peter Halkett said at the company's annual general meeting in Sydney on Friday that the latest trading update was ahead of expectations, especially in Australia, and came despite difficult trading conditions.

He repeated his pessimistic view first publicly shared in September - while announcing a $27.87 million annual net profit - that he thought the current tough trading climate was the "new normal".

City Index Group's chief market analyst Peter Esho said Kathmandu was reporting far stronger same-store sales growth than any other lister apparel retailers, including Premier Investments, owners of Just Jeans and others.

In an address to shareholders, Kathmandu chairman James Strong said the results had to be viewed with caution, with economic conditions globally likely to inhibit discretionary consumer spending for some time.

While Kathmandu's latest sales increase was strong, the 15 weeks to this week are the least important part of the year representing only 16 per cent of its sales mix in 2011.

The crucial Christmas and post-Christmas sales are worth 26 per cent and the Easter and winter sales 58 per cent.

Mr Strong told shareholders that Kathmandu's vertically integrated brand gave it total control over how it developed and distributed products.

That helped it better compete compared to other retailers hurt by international online retailing, he said.

"There is no change to our view that the Kathmandu brand has genuine potential to be a significant global presence in the outdoor travel and adventure market," Mr Strong said.

By Greg Roberts