Kathmandu shares slump on profit warning SHARES in retailer Kathmandu have slumped after it warned half year profit will fall despite strong sales growth. A POST-WINTER clearance campaign delivered better than expected sales, driving total sales growth of more than 18 per cent in the 16 weeks to mid-November. But this was offset by a decrease in profit margins due to lower prices, and margins in the first half of the company's fiscal year are expected to remain lower than in the same period last year. "Our operating costs are spread approximately evenly across the year, whereas revenue is weighted to our second half trading," acting chief executive Mark Todd told the company's annual general meeting. Because of this, and our UK brand campaign costs, we expect first half earnings will be down on the same period last year. Its shares dropped by as much as six per cent on Friday, but recovered to close at $2.65, down three cents, or 1.1 per cent. Kathmandu's half year profit would depend on the Christmas trading period, Mr Todd said. The company has embarked on a three year campaign to expand its brand beyond its main market of Australia and New Zealand. The push, which began a few weeks ago, will focus initially on the UK, where the company already has four stores, and Europe. It has been accompanied by a lift in sales at the Kathmandu stores in the UK, Mr Todd said.