Sunday Strategist: Kathmandu, the Patagonia of New Zealand, Is Coming to America

(Bloomberg Businessweek) -- Like a down-swaddled climber bound for the highest peaks, Kathmandu lands in America this week.

Outdoor gearheads will find the New Zealand-based company’s packs, parkas, and sleeping bags for the first time in 25 stores, including REI and Walmart’s Moosejaw. It’s a bold move into a cold, crowded market.

For the unfamiliar, Kathmandu is basically a down-under version of Patagonia with about $350 million in annual revenue. It makes its own gear, sells it primarily in the 170 stores it has across Australia and New Zealand, and funnels a ton of returns into environmental initiatives. The main difference between the two is that Kathmandu is publicly traded. So it has to be circumspect about things like suing the Trump administration or splashy global growth.

Kathmandu planned its U.S. expedition like any self-respecting climber: fast and cheap. It set up a base camp of sorts last year when it bought Oboz Footwear, a Bozeman, Mont., company, for $60 million. The deal brought in house a line of hiking boots, one of the few products the company didn't yet design and make.

More importantly, though, Oboz instantly extended the Kiwi company’s supply chain across the Pacific Ocean—the global equivalent of last-mile delivery. It suddenly had a North American sales team, warehouse, distribution center, and marketing department; it even had a bunch of accounts. The U.S. sales pitch flipped from a cold call to “what else can I interest you in?”

“The difficulty was in having the infrastructure,” Xavier Simonet, Kathmandu's chief executive officer, tells me. “It’s literally about having an office, a bank account, and the opportunity to leverage their knowledge in wholesale.”

Building all of that would likely have been more expensive than buying it, and certainly more fraught. “We’re actually not keen to spend a lot of money,” Simonet says, deadpanning.

At the same time, the big names in U.S. outdoor apparel are “over-distributed,” he argues. For Kathmandu, North America is unchartered, which gives the company a chance to cherry-pick the healthiest retailers. It doesn't have to bother with discount outlets or department stores. (Just, perhaps, the fact that when most Americans hear “Kathmandu,” they think of a Bob Seger song, and not the best one). 

Kathmandu's ads will focus on the company’s sustainability commitment, which is a fast-appreciating asset in part because of Patagonia’s work in creating a more woke marketplace. And then there’s the Kiwi origin story, which holds a fair share of romance for those who ski, hike, fish, or watch Lord of the Rings films.

“In the outdoor category, there’s always space for new, exciting brands,” Simonet says. “And New Zealand is quite a fascinating country for a lot of people.”

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To contact the editor responsible for this story: Bret Begun at bbegun@bloomberg.net

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