7 August 2015
Briscoe Group Initial Reactions to Kathmandu Target Company Statement
Briscoe Group said today that following its initial review of the Target Company Statement it believes that its takeover
offer fully reflects the value of Kathmandu shares.
Managing director Rod Duke said: “The 2015 full year earnings figures came in well below what we had expected and well
short of analyst consensus forecasts. In the absence of our takeover offer, it is highly likely that the Kathmandu share
price would have suffered a significant downward correction from the NZ$1.39 price as at market close immediately prior
to Briscoe Group announcing its 19.9% shareholding.
“It is a tough retailing market out there. As retailers we accept that, and seek to develop and implement strategies to
ensure that we outperform our competitors, and some of us have seen good results. But I did not expect the Kathmandu
Board to simply throw up a catalogue of excuses as to what it got wrong and to expect shareholders to accept it. Anyone
who follows Kathmandu closely will know that same store sales growth across the group has been in decline for the past
four years. The failure to address this was always going to catch up with the company. As Kathmandu’s largest
shareholder its latest performance gives us little confidence in its 2016 full year forecast, which in our view are
based on ambitious assumptions that come with enormous execution risks.
“Our offer remains on the table and is open for acceptance until the 17th of September, unless extended in accordance
with the Takovers Code. We believe that Kathmandu is a great brand and has good products, but by its own admission is
failing to execute basic retailing fundamentals. Nothing in Kathmandu’s Target Company Statement provides confidence
that management is able to deliver a turnaround and achieve its lofty earnings forecasts. We believe that it makes
enormous sense to join the Kathmandu business with ours to create a bigger, better and stronger retailing group to the
benefit of both companies’ shareholders.
“Kathmandu’s current trading price reflects the presence of Briscoe Group’s offer. In the absence of the offer, there is
a high possibility that the Kathmandu share price would fall to the levels it had been trading at prior to the
announcement of the offer, if not lower, particularly given the poor FY15 result.”
ends