Adventure clothing chain Kathmandu says good Christmas sales in Australia will help it report stronger profit for the first half of 2018.

The company, in a trading update, says net profit after tax for the first six months of the financial year will be no less than $NZ12 million ($11 million), up from $NZ10 million.

Total sales will be about $NZ204 million, up from $NZ196.3 million.

However, overall group same store sales for the 25 weeks to January 21 were down 0.8 per cent at constant exchange rates.

In Australia, Kathmandu’s biggest market, same store sales grew by 1.9 per cent, but fell in New Zealand by 6.4 per cent.

In Australia, some retailers have reported a subdued Christmas sale season. In a December quarter update, department store David Jones reported a 3.8 per cent drop in sales.

In general, bricks and mortar retailers have been hit by an increasingly highly competitive market, with digital players making inroads into market share and consumer sentiment keeping spending down.

Kathmandu will release the full result for the half year on March 20.

“Striking the right balance in the key Christmas trading period between generating sales growth and improving our gross margin has fuelled healthy earnings growth,” says Kathmandu’s Chief Executive Officer Xavier Simonet.

“We have also continued to strengthen our balance sheet position during the first half.”

The retailer returned to profit in 2016 after a series of sales promotions in 2015 which confused customers. Since then Kathmandu has exited its UK sales network.

 

This article first appeared on Business Insider Australia, Australia’s most popular business news website. Follow Business Insider on Facebook or Twitter.

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