Good morning, everyone. My name is David Kirk, and I'm pleased to welcome you as chairman of KMD Brands Limited to our 2022 annual shareholders meeting. I extend a warm welcome to all shareholders joining us online today through our virtual meeting platform provided by our share registrar, Link Market Services. I declare that a quorum of shareholders is present, and the meeting has been duly convened. I'm also pleased to officially open online voting. Before we start the formal business, I would like to introduce you to my fellow directors, Philip Bowman, second from the left, Abby Foote next to him on his right, Brent Scrimshaw, Andrea Martens, the one left next to Michael Daly, and of course, Michael Daly, our Group CEO and Managing Director.
I also welcome Peter Taylor over here from KPMG, Chris Kinraid, our Group Chief Financial Officer, and Frances Blundell, Company Secretary. In terms of the format for today's meeting, I will start by making some brief comments about the 2022 financial year for KMD Brands. I'll then hand over to Michael, who will provide more details on the achievements and challenges we have experienced over the past year, including a summary of the group's financial performance and future strategy. We'll then move to the formal business of the meeting. There are three resolutions to be considered by shareholders today, and these are set out in the notice of meeting. An opportunity will be given to shareholders to ask questions about or make comments on the items of business on the agenda for today's meeting.
All voting on the resolutions to be put to today's meeting will be conducted by way of a poll. To vote, you will need to click Get Voting Card within the online meeting platform. You'll be asked to validate your registration by entering your shareholder proxy number, which can be found on your proxy form. Once your registration is validated, you'll receive an electronic voting card, which will enable you to cast your votes on each of the resolutions that we consider today. You can cast your votes on the resolutions at any time during the meeting today. Please mark your voting card in the way you wish to vote by clicking For, Abstain, or Against on the voting card. Once you've made your selection, please click Submit Vote on the bottom of the card to lodge your vote.
If you have any issues with registration or voting, please refer to the Link Market Services Virtual Meeting Online Portal Guide that can be accessed through the virtual meeting web link or call the helpline on 0800 200 220. There will also be an opportunity after the resolutions set out in the notice of meeting have been considered for shareholders to ask any questions of a more general nature. To ask a question online, you will need to validate your registration. Please use the question function and your question will be conveyed to the meeting. If you need further information about how to ask a question, please refer to the Virtual Meeting Online Portal Guide or call the helpline on 0800 200 220. I would encourage you to send through your questions as soon as you can.
Questions may be moderated or combined with other questions where they relate to the same topic. Proxies. Valid proxies have been received from 274 shareholders holding approximately 58% of issued shares. More than 90% of the proxies directed are in favor of all resolutions. The minutes of the 2021 annual meeting held last year have been reviewed and approved by the board and signed by me as a true and correct record of the meeting. I also note that the company's annual integrated report is available to all shareholders through the company's investor website. Any shareholder who has not received a copy of the annual integrated report in the post but would like to request a physical copy can do so by contacting the Company Secretary or our share registrar, once again, Link Market Services.
We will address any questions from shareholders on the annual integrated report or financial statements under general business later in the evening in the meeting. Now I'd like to say a few words about 2022. 2022 was another disrupted year for the company, but one in which we took significant steps on our journey to be a successful global owner of a group of iconic outdoor brands. During the year, we changed the name of the listed company to KMD Brands. We also refreshed our purpose, inspiring people to explore and love the outdoors. We refreshed our vision to be the leading family of global outdoor brands designed for purpose, driven by innovation, best for people and planet. Group sales increased to NZD 980 million in FY 2022, a record result. Gross margin was maintained despite elevated international freight costs and raw material cost pressure.
The full-year profit result was heavily affected by COVID-19, with lockdowns in the first quarter impacting retail trade in Australasia and supplier closures in Vietnam severely limiting Oboz sales in North America. We see strong growth opportunities in all three of our brands, and we continue to invest in our brands, digital infrastructure, store network, and our people to deliver on the opportunity we see. Two of our strategic pillars are to build global brands and lead in ESG, and in FY 2022, we increased our investments in brand marketing and ESG by NZD 18.6 million year-over-year. The directors announced a record dividend payment for FY 2022, distributing NZD 43 million to shareholders. FY 2022 was Michael Daly's first financial year as Group CEO. He has led the organization with energy and passion since taking on the role.
Michael has established a small, high-quality group office in Melbourne and has played a very hands-on role in the development of the next stage of growth for the Kathmandu brand. Last October, we appointed Abby Foote as a non-executive director. Abby has significant governance experience and has become the chair of the Audit and Risk Committee. After more than 11 years of great service to the company, John Harvey will retire as a director at the end of November. John has been a director of the company since it was listed in 2009. John has brought a wealth of knowledge, experience, and insight to the board. We thank John for his commitment and significant contribution to the company.
As you would expect, we've been searching for a non-executive director to succeed John, and as recently announced, we are delighted that Zion Armstrong has agreed to join the board from the first of December 2022. Zion has had a very successful career in the global branded sportswear industry. Zion spent 24 years with Adidas, stepping down as President of North America in early 2022. Zion's experience in the North American and Asian markets, and proven capability in global brand management, product development, and multi-channel distribution, is a perfect fit for the next stage of growth for KMD Brands. We very much look forward to welcoming Zion to the board. In closing, I sincerely thank my board colleagues for their hard work, good humor, and ongoing commitment to making KMD Brands successful.
Over the last two years, despite many challenges, we have built a strong foundation for future growth. Finally, thank you to you, our shareholders, for your continued support of the company. I will now ask our Group CEO, Michael Daly, to address the meeting.
Thank you, David. Good morning, everyone, and thank you for joining us at today's annual meeting. I'm very proud to be here today and present to you as the CEO of KMD Brands. We have a very clear purpose that we, as a company, feel strongly about, which is to inspire people to explore and love the outdoors. Our vision is to be the leading family of global outdoor brands, producing products that are designed for purpose, driven by innovation, and best for people and the planet. This purpose and vision guides all operating decisions that we make. Moving on to slide seven. Our brands continue to have global reach with over 300 stores currently operating globally, and our brands being sold in over 8,500 locations. Australasia is still our biggest market.
In a normal year, generating approximately NZD 650 million in sales. 80% is from Australia. North America generates approximately NZD 200 million of sales. Europe, NZD 100 million. Asia, NZD 30 million. South America, NZD 20 million. Kathmandu and Oboz currently operate in three of the six continents, while Rip Curl has a global presence with stores operating in all major continents across the globe. Slide eight shows our refreshed group strategy with the four strategic pillars we are focusing on as a group. We will continue to build a portfolio of global brands and aim to further expand our global footprint as we invest in world-class brand and customer experiences. We are elevating our digital capabilities by investing in group digital platforms to deliver a truly world-class unified commerce experience.
We'll also leverage and deliver operational excellence to all of our brands across shared group support functions. Finally, we are demonstrating leadership across environmental, social, and governance by transforming business culture and mindset. As we execute on our strategy, it's important for us to maintain balance sheet flexibility to support organic growth and M&A initiatives. Turning to slide nine. I would like to discuss the group's 2022 financial year highlights. We are pleased with the results we have achieved this year while navigating the challenging impacts of the COVID-19 pandemic. The group achieved a record sales result in FY 2022, with the Kathmandu brand having its highest ever sales for quarter four.
Rip Curl sales increasing 9.5% to NZD 536 million, and there was a record order demand for Oboz, limited this year by COVID impacts on supply capacity, which has since been scaled up. The second half of the financial year was particularly strong, with record second half group sales and underlying EBITDA. Although the group, like most global consumer companies, experienced elevated international freight costs and raw material cost pressures, gross margin was maintained year-on-year. The Kathmandu brand achieved its highest ever gross margin result and earnings in the fourth quarter, with currency benefit and a deliberate strategy to carefully moderate the historic high-low pricing model. In line with our digital transformation strategy, the online channel continued to grow beyond the COVID step change. Group online sales increased by 19% year-on-year, now comprising over 16% of direct consumer sales.
As David mentioned, the group has continued to maintain a strong balance sheet, allowing us to invest in organic brand growth, which this year included increasing the investment in brand marketing and ESG by NZD 18.6 million year-on-year, as well as strategic inventory investment to temporarily build stock positions given supply chain challenges. As David said, the directors declared a record dividend payout with NZD 43 million returned to the shareholders for the 2022 financial year. The group did experience significant COVID disruptions in FY 2022. In the first half year, COVID lockdowns in Australasia resulted in more than 11,000 lost retail trading days for Rip Curl and Kathmandu. The lockdowns were more severe than last year, and less government support and rent assistance was received, impacting year-on-year EBITDA by approximately NZD 35 million.
Oboz saw record demand for its products, but was unable to meet unprecedented customer demand with a 3-month COVID closure of Vietnam factories, compounded by international freight delays impacting approximately 40% of customer orders. Oboz's underlying EBITDA was NZD 8 million below last year. Moving to slide 10. We will look at the sales growth for the four quarters across all three of our brands. Rip Curl experienced consistent sales growth for the final three quarters following lockdowns in the first quarter in Australasia. Fourth quarter total sales growth increased 18.1% compared to quarter four last year. Kathmandu rebounded strongly in the second quarter following lockdowns in the first quarter. The third quarter was impacted by ongoing COVID interruption to footfall and staff availability, particularly in New Zealand.
However, the fourth quarter saw record revenue and earnings with total sales growth of 24.5% compared to the fourth quarter last year. Oboz's second and third quarters were heavily impacted by the three-month COVID closure of Vietnam factories and international freight delays. The fourth quarter saw strong sales growth of 17.2% compared to Q4 last year as supply chain challenges were addressed. Overall, as COVID disruptions ease and operations return to normal, we saw a strong rebound in sales in quarter four across all three of our brands, putting us on a strong footing for FY 2023. Moving on to slide 11, I will now discuss the operational achievements made in FY 2022 across the group and its brands. Our operational achievements across all of our brands have aligned with our refreshed strategic priorities.
At a group level, we appointed leaders in North America and Europe to oversee the growth of all three of our brands in our key international markets. We implemented a new loyalty management system across both Rip Curl and Kathmandu in Australasia. We made some key appointments to leverage operational excellence across back-office functions for all three brands. In the area of ESG, we have now submitted B Corp applications for all of our brands. In relation to Rip Curl, we enhanced Rip Curl's status as a leading global surf brand by sponsoring the first ever World Surf League finals held in the USA, a key international growth market. We launched Rip Curl's membership program in Australia, and we also leveraged operational efficiency by consolidating the point of sale and retail ERP systems across Australasia for Rip Curl and Kathmandu.
In ESG, we recycled around 2,500 wetsuits in Australia by implementing a wetsuit take-back program with TerraCycle. Kathmandu's global brand expansion is underway with the initial sell-in success to limited wholesale customers in Europe and Canada. We are leveraging Rip Curl's infrastructure to drive our international expansion into Europe and Canada, and a plan for a US launch in FY 2023. The execution of our digital strategy is evidenced by close to 25% growth in online sales, now accounting for over 18% of all sales. Kathmandu remains a leader in ESG, winning the Deloitte New Zealand Top 200 Sustainable Business Leadership Award. Also leading the way with breakthrough sustainability innovation, the BioDown jacket, an industry-first biodegradable down-filled jacket, received international recognition by winning the Outdoor Retailer and ISPO awards. For Oboz, additional factories were onboarded to diversify the supply base and increase capacity.
Online sales exceeded expectations once inventory levels recovered, with this channel representing a significant growth opportunity for the brand. We leveraged operational excellence by implementing a group business intelligence tool for Oboz and made progress in ESG by fully digitizing the product design process using 3D designs to reduce material waste. It was a very productive 2022, and we're very proud of these achievements under each of our strategic pillars. Moving to slide 12, we have a clear set of strategic priorities to focus on in FY 2023. We will continue to build global brands with the full rollout of Rip Curl membership program in Australasia. We will build on all initial success of Kathmandu's international launch into Europe and Canada, with plans for future launch in USA. Oboz will continue to expand its distribution through connections with new consumers and exciting product ranges.
We will elevate digital through the continued global rollout of our new group-wide loyalty management, customer data, and online trading platforms across all brands. We will launch Kathmandu online sites in Europe and Canada, relaunch the Kathmandu loyalty program with an exciting new value proposition, and build out Rip Curl and Oboz's B2B dealer platforms. We will leverage operational excellence at the group level through merging our Canada and UK fulfillment centers across all brands. Kathmandu will also leverage our existing Rip Curl infrastructure as it continues to expand internationally. Lastly, we will continue to lead in ESG as we progress towards B Corp certification across all of our brands. Rip Curl will roll out its TerraCycle wetsuit take-back program globally. Kathmandu will launch a trial take-back and renewal program. Oboz's innovative use of bio-based alternatives to EVA midsoles will continue to reduce our carbon footprint.
Turning to slide 13, I'd like to provide an update on our B Corp certification. B Corp-certified companies are for-profit organizations that use the power of business to build a more inclusive and sustainable economy. Being a certified B Corp means companies are meeting stringent standards of verified social and environmental performance, public transparency, and legal accountability to balance profit and purpose. This provides customers, investors, suppliers, and employees with confidence that certified B Corps align with their own values. Regarding an update on our brands, Kathmandu became a certified B Corp in 2019, with a recertification application submitted in August 2022. Rip Curl and Oboz initial application for B Corp certification were submitted in August 2022 as well, with the verification and recertification process now underway for all three of the group's brands.
Moving now to slide 14 and our trading update for the first quarter of FY 2023. We are very pleased with the positive start with all of our brands achieving strong sales growth year-on-year. Group underlying operating profits for the first quarter of FY 2023 has improved by nearly NZD 30 million year-on-year after cycling Australasian lockdowns in the first quarter of last year. Comparisons to the first quarter of last year are not meaningful, as there were widespread COVID lockdowns across both Australia and New Zealand. A more relevant comparison is to the first quarter of FY 2020 before COVID.
We can see that group sales in the first quarter of this year are higher than before COVID, 17.5% above the first quarter of FY 2020, including Rip Curl sales prior to acquisition. Same store sales growth year to date for the Kathmandu brand is particularly strong at 107.2%. Cycling the Australasian lockdowns that affected most of the Kathmandu store network last year. By comparison, same store sales growth in Rip Curl is 29.7% as its store network is more diversified beyond Australasia. Again, as last year was heavily impacted by the Australasian COVID lockdowns in Q1, we caution investors against extrapolating these results. The supply challenges experienced through COVID have been resolved, allowing the brand to achieve record Q1 sales results for both the wholesale and online channels.
Oboz's inventory position has recovered, allowing us to fulfill wholesale order book demand and support the significant online growth potential of the brand. The group's gross margin remains resilient with a pleasing year-on-year improvement in gross margin during Q1 for the Kathmandu brand. Looking forward, while current trading for our three brands remains strong, we remain cautiously optimistic, with the potential of high inflation and rising interest rates impacting consumer sentiment in our key global markets. As always, the first half year results remain dependent on the key Black Friday and Christmas retail trading periods still to come. That is now the end of my presentation. Thank you for your attention. I will hand back to David to run through the formal part of the meeting. Cheers.
Thank you, Michael. I would again like to express my thanks and those of my fellow directors to you and your team for the dedication and strength that you have all demonstrated through the challenges of 2022. We come now to the third item on today's agenda, the election of directors. The NZX listing rules require that a director must not hold office without re-election past the third annual meeting following the director's appointment or three years, whichever is longer. A director appointed by the board must not hold office without re-election past the next annual meeting following the director's appointment. Pursuant to the NZX listing rules, Andrea Martens retires at today's meeting and offers herself for re-election by shareholders. The board unanimously supports the re-election of Andrea. Information about Andrea is contained in the explanatory notes to the notice of meeting.
I now move the following as an ordinary resolution that Andrea Martens, who retires at the annual meeting and is eligible for re-election, be re-elected as a director of the company. I'll now invite Andrea to address the meeting.
I'm Andrea Martens, and I've served on the KMD Brands board for the past three years. I'm currently chair of the Remuneration Committee and wish to be re-elected for both roles again. We're all aware that there are many challenges facing businesses as we move into 2023. Changes in the economy, society, and legislation are all set to impact the way every business operates. In my extensive corporate career, I've always reframed challenges like these as opportunities. Helping businesses take advantage of the opportunities has become a specialty for me. In my current role as CEO of the Association for Data-driven Marketing and Advertising, ADMA, I liaise and learn from business leaders across the country on how they are tackling these challenges. It's my job to help businesses through times like this, and it's something that I'm very passionate about.
I've worked across multinational businesses for more than 20 years, starting my career at Unilever, a phenomenal training ground for anyone in business. There, I managed several important consumer goods portfolios, giving me a deep understanding of the retail landscape and the broader market. I led teams and worked with the rest of the leadership team to help evolve brands and reinvigorate categories in key categories. In my time as Chief Marketing Officer of Jurlique International, I led a major transformation program across the entire brand portfolio in 23 markets. This coincided with the rise of e-commerce, and I implemented systems and processes to set the business up to take advantage of these opportunities. Omnichannel marketing and distribution needs were front and center of these plans.
I've led teams at scale, distributed across different countries, worked internationally and with private equity, developed businesses in multiple markets, and have extensive experience in risk management. All of this experience also equips me with great expertise, which already have brought to bear with the Remuneration Committee. Moreover, in my role at ADMA, we have work streams and training around the workplace and emerging labor market dynamics. I'm also spending time studying and consulting best-in-class talent in these key areas. I'm immersed in this every day. In the words of famous ad man, David Ogilvy, "Caring is out of scope, but I do it anyway." I care about this business and understand the importance of its ongoing success and development to our customers and the communities that we serve. I care because my family and I are customers.
We have an outdoor lifestyle from horse riding to surfing, hiking, and camping, and it gives me a true perspective of how we serve our customers and areas for improvement. I care because KMD cares, and I love what this business stands for and our commitment to people and planet. I am committed to play a key role in helping KMD navigate the many and varied challenges 2023 and beyond will throw at us. I hope you will vote for my re-election to allow me to continue doing so. Thank you.
Thanks, Andrea. Have we received any questions for discussion on the motion?
No, we haven't.
No, we haven't. There being no questions in the room? No? If there are no further questions on this matter then, I'll now put the motion. Please cast your votes now for resolution one, if you have not already done so. Please, now select either for, against, or abstain for resolution one on the voting card. It says pause for voting. I can see you know, crazy voting going on. It's now done. Thank you. We'll now move on to resolution two. The second resolution on the agenda today relates to fixing the remuneration of the company's auditor for the 2023 financial year. I move that the directors be authorized to fix the remuneration of the company's auditor for the ensuing year. Have we received any questions for discussion on the motion?
No questions online.
There being no questions, I will now put the motion. Please cast your votes now for resolution two if you've not already done so. Great, thank you. The final resolution on the agenda today relates to increasing the cap on the non-executive directors' pool. I move that for the purposes of NZX Listing Rule 2.11.1, the maximum aggregate remuneration of non-executive directors be increased by AUD 250,000. That is 25% from the present limit of AUD 1 million per annum in aggregate, to a limit of AUD 1.2 million per annum in aggregate, with effect for the financial year ending 31 July 2023 and onwards. Have we received any questions for discussion on the motion?
We've received two questions online. The first question from Simon Bush: Why do the non-executive directors require a 25% increase per annum?
Okay, let me just address that. Just to be clear, Simon, if you're online, we're not asking for a 25% increase in remuneration for directors, but for a 25% increase in the pool from which directors' remuneration can be paid. The actual increase in directors' fees for 2023 is 3%, which is, you know, modest compared to inflation. The current pool for directors' fees is very close to its cap, and we're asking for an increase in the cap, so we'll have the capacity to lift directors' fees as required over a period of time. It's expected that the increased cap would last around about 5 years. That's the answer to Simon's question, was it?
The next question from Bruce Parks: Because the amount paid to each director will be published in the 2023 annual report, why were the numbers not supplied in the notice of meeting material?
I don't think it's necessary. We're not required to provide the numbers in the notice of meeting, and I'm not 100% sure whether that is typical or not. You may have a bit of understanding of that, Frances.
We provided information about the 3% increase for non-executive director fees and the addition of fees for the roles of Remuneration and Audit and Risk Committee chairs. In our view, that provided the necessary detail to inform shareholders about the amounts planned for payment for FY 2023. As noted by Bruce, the actual amounts paid will be fully disclosed in the 2023 annual report.
Okay, great. Thank you. It's a comprehensive response. Hope that's helpful, Bruce. Are there any other questions with regard to this resolution three?
None received online.
Okay. There being no further questions or discussion, I will now put the motion. Please cast your votes now for resolution three if you've not already done so. Shareholders should ensure they have now submitted their votes for all three of the resolutions set out in the notice of today's meeting. Voting will remain open until the conclusion of the meeting. Once voting is closed, Link Market Services will tally the votes. The results will be announced to the NZX and the ASX once counting has been completed. Thank you. I would now like to give shareholders an opportunity to ask questions concerning any matters addressed at this meeting or of a more general nature concerning the company. Anybody who now wishes to ask any further questions, please ask your questions using the Ask a Question button.
If we run short of time and are unable to answer your question online today, we will endeavor to respond to you after the meeting. Have we already received any questions, Frances?
We've received a few online. The first from Coralie Van Kemp : How many shareholders who are not part of the board or management have turned up physically in Sydney for this AGM?
Okay. She's asking me to count. 1, 2, 3, 4, 5, maybe. 4? Okay. We can confirm it's a solid 4.
We have two voting and I think everyone else is a guest.
Okay. There we go. Thanks. Has that dealt with the question?
Yes. The next question from Sean Huang. "Hi, do you have any plans to open China market as there are now more and more young people starting to do outdoor activities now? Thanks.
Okay. I think that'd be a nice one to pass to Michael.
Sure. Yeah, look, China, along with many countries around the world are on our longer term list of countries to focus on. Our immediate focus is on our existing key markets in Australasia, of course, Europe and North America. That's probably where our immediate focus will be. That said, we haven't lost sight of the importance of the China market and the size of the China market, and certainly we'll continue to consider our options as we move forward, but it's unlikely in the short term.
Thank you.
Okay. Next question from Amanda Sim. "When will there be a move away from using plastics in synthetic material to natural fibers? Will there be a textile take-back program for Kathmandu clothing in the near future?
Michael.
Yeah. Thank you for that question. It's quite a detailed answer to that one. I don't wanna trivialize the question, but just in brief, the second part of that question in terms of a take back program for materials, pleased to announce that we'll be doing a trial in partnership with a department of the State of Victoria to roll out some take back within a small number of stores by the end of this financial year. That will complement an already existing repair and restore facility that Rip Curl provides in all of its key markets across wetsuits and watches. We think it's a really important initiative. One of our brands in Rip Curl has been doing this for decades.
Mm-hmm.
With particular categories, and we're excited by the opportunity of that trial. With respect to the first part of the question, in terms of natural fibers, it's a very complicated area. It's one that we focus on as a team across all of our brands on a daily basis with our product teams. I'll give a more detailed answer to Amanda, but I would encourage all of our shareholders to read our integrated report. We put some very clear targets around responsibly sourced materials, around diverting waste from landfill, and also on our specific goals around our packaging for all of our products. They are very clearly set, and we intend to hold ourselves both accountable and be transparent in terms of progress towards those goals as we move forward.
Next question.
Great. We've got a question from Lawrence Watkins. Firstly, a comment. In the front end of the annual report, there's no comment on sustainability in the summary stats and in the chairman's and CEO's introductory comments. This reflects poorly on the values and leadership of the company. Question: I note you have a goal to provide a safe and healthy workplace, yet the annual report includes no performance outcomes for workplace health and safety across the company. Why? And will details on health and safety performance be provided in future reports?
I'll just comment on your comment to start with. If you can rewind that a bit so I can see who I'm dealing with. Lawrence, you say in the front of the annual report. It's actually an integrated report, which includes a great deal of material on sustainability in all sorts of different ways. I think, perhaps there's no very specific comment right at the beginning of that report, but the whole report is an integrated report dealing with sustainability of all of our assets, including our financial assets, but all other assets as well, including people, of course, and brands and others. I won't take the opportunity to take issue with your comment that this reflects poorly on the values and leadership of the company, except to say I disagree with you completely.
Your question about a safe and healthy workplace is a good one. You know, it's absolutely front of mind for the company to provide safe and healthy workplace for all of its employees. Management focuses very much on this, and the board receives detailed reports from all brands and summarized across the whole organization at every board meeting. Whether it makes sense for us to include in our integrated report more specific information about health and safety targets and performance is a good question for us, and thank you for raising that. We'll certainly look at that for future integrated reports.
Great. The next question from Neil Pathley . With the group now doing so well, why does management think the share price is still languishing?
Well, it's a good question, and one that does sometimes frustrate us. If I was to make any general comment on why share prices generally are languishing and KMD Brands along with them, it's to do with much broader uncertainty in the global economy. Inflation is very high. We're at a period of increasing interest rates, all of which, generally speaking, or certainly looking in the past, would tell you that there's a reduction in consumer demand coming. Consumers are going to be careful about spending their dollars. Given that, KMD Brands is a consumer discretionary spend, it may be that there's a tighter market for our products in the future. I think that's what some investors are thinking, and that's factored into the share price now.
Pleased to say, and I haven't checked recently, there was a very encouraging bounce in the share price this morning when the market received the information we've been able to put out today about trading performance in the first quarter of the year. Yeah, we feel we're doing the right things for the current environment, but we can't change people's expectations of the trading environment in the future.
All right, next question from Peter A Richardson . With inflation rising, how will KMD Brands maintain gross margins?
That's a good question, Peter. I think Michael is well-positioned to answer that.
Yeah. Look, as a management team, we focus on our margins on a daily basis. The timeline and lead times of our products are such that we know well in advance what the cost of our goods in terms of getting them to market are. That enables us to make sure we set the prices appropriate to ensure we hit our first margins. If you look at our performance in FY 2022, we had a lot of unexpected impacts on our margin right through 2022, and our gross margin really didn't move much at all. As we mentioned in our trading updates, our gross margins continue to be resilient. In terms of how we actually maintain our gross margins, it's just through clear discipline to ensure that we maintain our first margins.
Being very careful about the inventory that we buy to ensure that we don't see dilution in our margin from excess inventory. That's an ongoing focus, now into the future, and we remain confident about our margins moving forward.
Great. A fifth question from Coralie Van Kemp. Will KMD return to New Zealand for the 2023 AGM in light of the poor turnout in Sydney?
I wondered why you were burrowing for information on how many people were there, Coralie. You've set yourself up for a second, a good second punch. I think it's highly likely we will have next year's AGM in New Zealand. We tend to split the two AGMs between the two countries. Of course, as Michael said earlier in his presentation, 80% of our Australasian revenue comes out of Australia. This is a very big market for us and important that we are engaging with shareholders in this market. As I said, I think we will likely be back in New Zealand next year.
There's no further questions online.
Are there any other questions in the room? Yes.
Thank you. My name is Alan Carter. At the moment, there are five directors. Is that correct?
At the moment. Well, if we take Michael out of it as an executive director, there are six non-executive
So the-
There are six non-executive directors.
Is there any move to increase the number of female directors on the board? Could you increase, say, two directors and have at least one of those so that you had three female directors on the board?
Yeah, there's no intention to increase the number of directors in total that we've got. We think that we've got about the right amount of directors now. The mix of gender between male and female will depend on our ability to find the right people at the right time. When we've just recently had a vacancy with John Harvey stepping down, as I mentioned earlier, and Zion Armstrong joining, we would've been very happy to appoint a female director if we'd been able to find a female director with like experience and capabilities to Zion.
My only point is the population is generally made up 50/50. The board should reflect something like that. In my opinion, it should reflect something like that. Not to reflect that, I don't think is a good reflection on what the company is trying to do.
Yeah. I think that's a reasonable position. I do. It's very difficult to find the skills. I don't think most shareholders would want us to make an appointment purely on the basis of gender. Just let's get 50%, and so let's make sure that we appoint people in order to get to 50/50. We have to take into account the, you know, the challenges that the company has in front of it and the targets and strategy it has, and directors with experience of delivering on the strategy. Zion Armstrong is a great catch for us. He's had, you know, 24 years working for Adidas, 30 years working in the global branded sportswear industry and has come back to New Zealand, and now resident in New Zealand, so we can grab him. Those skills are very rare.
Finding them in a male or a female is difficult. It happens this time we found them in a male. If we'd been in a female, we would've been very happy to appoint as well. I mean, I agree with you ideally, but it's just really practically difficult to deliver on the aspiration you set for us.
I look at other companies. They don't seem to have those difficulties. I have 11 other shares in my portfolio, Telstra, IAG, FMG, Nickel Mines. They don't seem to have your concerns. Thanks very much.
Okay. Thank you. Another one's popped up.
Question. A question online. Where does Kathmandu stand in terms of adopting electric vehicles as a means of reaching net zero?
What are you thinking, Michael?
Well, we don't have a very large vehicle fleet, to be honest. So it's not a significant carbon emission that we have. Of course, like any consumers, including a corporate consumer, we'll certainly look at EV cars as we move forward if they are practical and make sense. We'd be crazy not to. It's not. We don't have a lot of vehicles in our fleet, so not a major focus, but we'll certainly continue to look at like everyone else is at the moment.
Anything more, folks?
There's nothing further at the moment.
Any more curly questions in the room? Okay, nothing more. That's it. Thank you, ladies and gentlemen. That concludes today's meeting. I thank you for your continued support and attendance today, and I'll now declare the meeting closed.