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and have developed a new two-year sustainability plan for 2014 - 2015. Our goal is to deliver value to our stakeholders through sustainability, while positioning Kathmandu as a leader in this area. 

A full account of our achievements is in our annual 2013 sustainability report, prepared in accordance with the Global Reporting Initiative guidelines. 

## OUR TEAM 

Employee numbers as at 31 July 2013 increased from 1,722 last year to 1,920 this year, in line with our continuing growth in store numbers. Approximately 69% of the total workforce is full time or part time permanent employees. We have made a substantial investment in training and development capability during the year. It remains important to our success, that Kathmandu’s staff continue to maintain their positive view of us as their preferred employer, and that we provide a career pathway to leadership roles within our business and the wider retail sector. On a personal note I want to thank my Executive management team for the support and leadership they provided in delivering an excellent result, in particular during my period of absence from the business during the second half of FY2013. 

## MARKET OVERVIEW AND FUTURE OUTLOOK 

Kathmandu faces strong and growing competition from local and international outdoor and travel brands and retailers. The latter group are increasingly moving, in whole or in part, to operating the same vertical business model as Kathmandu. Overall this model appears to be the most successful and resilient retail model in our current markets, and it aligns effectively with online sales channels. The outdoor category remains an attractive sector for investment, hence there continues to be both local and global merger and acquisition opportunity for good outdoor businesses and brands. The sustained growth in category store numbers over a number of years in both New Zealand and Australia reinforces our assessment of the relatively strong outlook for the category. This contrasts with other retail sectors dependent on discretionary consumer spend that have been much less resilient since the 2008 GFC. 

## GROWTH OPPORTUNITIES 

We continue to develop our store network plan to ensure our target of 170+ stores in Australia and New Zealand is aligned with our continuously evolving analysis of the optimal footprint and location for each prospective new site, and in due course numerous current sites that we will relocate. In conjunction with this, to further maximise store-by-store profitability, our product development and ranging strategy will continue to link closely into store planning. 

We now have 1 million active members in our Summit Club programme. Our improved customer relationship management platform will further enhance our ability to target the right offers to these core customers. Summit Club fits well with the opportunity for growth in online sales, in both current and future markets. 

Just as in our retail stores, retention of customers in the online space will be strongly influenced by how well we utilise customer analytics, and how we engage with those customers through channels such as social media and unique online only deals. Customer relationship management is critical to us in building the Summit Club through all channels we sell in. 

We have confidence that the Kathmandu brand and its product range can have wider growth potential internationally, and we are going to test this going forward with greater focus in the UK market initially. Our development of a path for global growth of the Kathmandu brand requires us to learn from the re-organised UK business, now a relatively low cost and low risk aspect of the business. 

We intend to take up on a structured basis the opportunities that online and digital technology provide, and the quality and effectiveness of our systems must be adequate to enable us to operate globally in a multichannel environment. We have recently launched a selected range of Kathmandu product on Amazon UK, and plan to explore other similar marketplace opportunities. Development is underway to enhance our capability to transact with customers via mobile devices, providing functionality for flexible ordering and customer product collection. These are all steps in developing the systems required to support growth initiatives available to Kathmandu outside our current business model. 

Kathmandu’s future continues to look positive, with opportunities for growth continuing to be identified, prioritised and implemented. We believe our competitive advantage, and a profitable core business, will enable us to grow our brand’s market reach. 

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