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## our team 

employee numbers as at 31 July 2012 reduced from 1733 last year to 1722. the reason for this change was a decrease in causal employees and an increase in full or part time permanent staff members from 50% to approximately 62% of the total workforce. our annual employee engagement survey again delivered pleasing results for our employees’ support of our brand and their positive view of Kathmandu as an employer. retention within our retail management teams remains a specific objective, and it continues to be challenging, particularly in the australian market. However, we are making pleasing progress, and additionally, the depth and competence of our wider leadership team continues to improve as our business grows. 

We hope that the worst impacts from the Christchurch earthquakes are behind us. We continue to be very appreciative of the tremendous on-going support and commitment from our sales, distribution and office staff located in our home city. 

as a result of the impact of the Christchurch earthquakes, and in the interest of growing the brand in the australian market, we have continued to grow our Melbourne based team, focussing on those areas of the business where australian domiciled roles will best support our growth in stores, marketing and direct-to-customer sales activity in the future. 

## outlook 

In the three years that Kathmandu has been an aSX and nZX listed company, we have achieved solid same store sales and profit growth, and continued to roll out new and profitable stores in australia and new Zealand. although the economic environment is even more uncertain today than it was when we listed, we continue to have confidence that there will be profitable growth for Kathmandu in both markets in the years ahead. In australia we have a substantial store rollout programme to complete, which will underpin achieving market penetration targets closer to those of new Zealand. our expanded and ever improving product range and the continuing growth in Summit Club membership will strengthen our customer loyalty, and grow sales in both countries. 

Investment in the Kathmandu brand and increasing the scale of our business remains critical to delivering our objectives. each year we will continue to target 15 new stores. We also plan at least 6 relocations or refurbishments of existing stores as we enhance our brand positioning, and take up opportunities to optimise earnings growth. In the year ahead we will open flagship stores in central Sydney and perth. locations such as these along with other flagship stores already opened will help define and lift our brand profile in the medium term. 

our substantial uplift in product investment over the past two years as we filled obvious gaps and took up sensible opportunities for range extension led to an increase in SKu count of approximately 30% over that period. In the future we will focus on alignment of our range to our retail stores’ footprint and location. our objective is to increase return from each SKu in our range through investment in product growth categories and assortment range planning that will increase revenue and reduce cost to service ratios. 

after we complete re-organising the now enlarged australian distribution centre later this year we anticipate a period of reduced capital investment in physical infrastructure relative to our spend in the past two years. However this will be offset by our commitment to continuing investment in our stores, both new and existing, and our systems - including online. this investment is to ensure we efficiently support our target australasian store network, and that in the medium and longer term we have capability to grow profitable global sales. Specifically, the launch of our new online platform will support wider sales activity in new markets, and planned investment to come in a new poS and CrM platform will also be critical to wider international expansion. 

the medium and long term growth opportunities for Kathmandu are numerous, but our immediate objective is to increase earnings in FY2013 above the profit earned this year despite the continuing uncertainty caused by the wider economic environment. Given the level of investment being made in our growth strategies we must be confident that Kathmandu will deliver improved performance in FY2013. our team will be working very hard to maximise the return on the investment being made, not just in the year ahead, but also in the longer term as we continue to grow the Kathmandu brand. 

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