Cheap wetsuits, good for surfers, bad for biz!
Two years back, and at the nadir of the Sasha Jane Lowerson what-is-a-woman imbroglio, Rip Curl slashed the prices of its best-in-category wetsuits, selling its top of the range suits for $350 in an attempt to move a warehouse full of inventory.
Twas a glorious epoch and a few people I know still have wetsuits with the tags dangling off the arms in their wardrobes, ready to be unsheathed when the two suits before ’em eventually disintegrate.
But with the heavy discounting came a price.
And not just the killing of no-frills brand like the excellent Project Blank, whose no teamrider to promote, all black suits were overlooked as surfers jumped on the three-hundred dollar e-bombs.
KMD Brands, the company that owns Rip Curl, has had a real kick in the nuts lately. Its share price has roughly halved. It was around NZ$0.38–0.45 not long ago, it’s a NZ company hence the currency, but now trades near NZ$0.20–0.23 (as of March 2026). This fall shows investors are worried to hell about the company’s profits and future.
The biggest issue is with Rip Curl, y’see, which makes up over half of KMD’s total sales.
In the financial year ending July 2025 (called FY25), Rip Curl sold about NZ$550 million worth of products, wetsuits, boardshorts, and clothing. That’s a small increase of +2.1% from the year before.
Sales grew more in their own stores and online (+4.6% in direct-to-consumer channels), with good results in places like Australia, North America, Europe, and Hawaii.
But making money from those sales has become much harder.
A key measure here is a thing called EBITA, which is short for Earnings Before Interest, Taxes, Depreciation, and Amortisation. It’s a way to see how much profit a business makes from its normal operations, before some big costs.
Rip Curl’s underlying EBITDA dropped 27% to NZ$30.6 million.
That means the EBITDA margin, when you measure it as a percentage of sales, fell to 5.6%.
This is wildly low and concerning for a premium brand like Rip Curl, which used to, under its previous management and ownership at least, hello Claw, Sing-ding, Neil etc, have stronger profits.
The main problem causing this squeeze is heavy discounting and promotions.
In a competitive market, Rip Curl, like plenty of other brands, had to offer big sales, markdowns, and deals to keep customers buying and to clear old stock. This promotional intensity lowered the average price they got for each item.
It helped keep sales steady or growing a little, but it hurt the profit on each sale.
The gross margin also dropped because of these discounts and clearing end-of-line inventory.
Even though selling more through their own stores, higher margins etc, helped a lil bit, it wasn’t enough to offset the damage from all the promotions.
This low profitability is what makes the future look terrifying for KMD. Rip Curl is a strong, iconic brand in surfing, but running at such thin margins means less money left to invest in new designs, marketing, or stores.
It also adds pressure on the whole company, contributing to the big group loss of NZ$93.6 million and the falling share price.
There are some positive signs now. In the early part of FY26 (August to December 2025), Rip Curl sales grew +5.6%, with better results in North America. KMD is working on a plan called “Next Level” to improve things: better control of stock, less reliance on deep discounts, fresh products, and focusing on higher-margin sales. They aim to lift margins over time.
Still, the ol discounting trap shows how hard it is for brands like Rip Curl right now. In a world full of sales and competition, keeping prices strong while selling enough is the big challenge to get profits back up.
Interestingly, that’s if you find these sorta financial plays so, KMD is worth around NZ$150 mill now but paid NZ$368 mill for Rip Curl back when KMD was worth almost 700 mill.
Dang.