KATHMANDU ANNUAL REPORT  2013 11 and have developed a new two-year sustainability plan for  2014 - 2015. Our goal is to deliver value to our stakeholders  through sustainability, while positioning Kathmandu as a leader  in this area. A full account of our achievements is in our annual 2013  sustainability report, prepared in accordance with the  Global Reporting Initiative guidelines. OUR TEAM Employee numbers as at 31 July 2013 increased from 1,722  last year to 1,920 this year, in line with our continuing growth  in store numbers. Approximately 69% of the total workforce is  full time or part time permanent employees. We have made a  substantial investment in training and development capability  during the year. It remains important to our success, that  Kathmandu’s staff continue to maintain their positive view of  us as their preferred employer, and that we provide a career  pathway to leadership roles within our business and the wider  retail sector. On a personal note I want to thank my Executive  management team for the support and leadership they  provided in delivering an excellent result, in particular during  my period of absence from the business during the second  half of FY2013. MARKET OVERVIEW AND FUTURE OUTLOOK  Kathmandu faces strong and growing competition from local  and international outdoor and travel brands and retailers. The  latter group are increasingly moving, in whole or in part, to  operating the same vertical business model as Kathmandu.  Overall this model appears to be the most successful and  resilient retail model in our current markets, and it aligns  effectively with online sales channels. The outdoor category  remains an attractive sector for investment, hence there  continues to be both local and global merger and acquisition  opportunity for good outdoor businesses and brands. The  sustained growth in category store numbers over a number  of years in both New Zealand and Australia reinforces our  assessment of the relatively strong outlook for the category.  This contrasts with other retail sectors dependent on  discretionary consumer spend that have been much less  resilient since the 2008 GFC. We continue to develop our store network plan to ensure our  target of 170+ stores in Australia and New Zealand is aligned  with our continuously evolving analysis of the optimal footprint  and location for each prospective new site, and in due course  numerous current sites that we will relocate. In conjunction  with this, to further maximise store-by-store profitability, our  product development and ranging strategy will continue to link  closely into store planning.  GROWTH OPPORTUNITIES  We now have 1 million active members in our Summit Club  programme. Our improved customer relationship management  platform will further enhance our ability to target the right  offers to these core customers. Summit Club fits well with  the opportunity for growth in online sales, in both current and  future markets. Kathmandu’s future continues to look positive, with  opportunities for growth continuing to be identified, prioritised  and implemented. We believe our competitive advantage, and  a profitable core business, will enable us to grow our brand’s  market reach. We intend to take up on a structured basis the opportunities  that online and digital technology provide, and the quality and  effectiveness of our systems must be adequate to enable us  to operate globally in a multichannel environment. We have  recently launched a selected range of Kathmandu product on  Amazon UK, and plan to explore other similar marketplace  opportunities. Development is underway to enhance our  capability to transact with customers via mobile devices,  providing functionality for flexible ordering and customer  product collection. These are all steps in developing the  systems required to support growth initiatives available to  Kathmandu outside our current business model.  Just as in our retail stores, retention of customers in the  online space will be strongly influenced by how well we utilise  customer analytics, and how we engage with those customers  through channels such as social media and unique online only  deals. Customer relationship management is critical to us in  building the Summit Club through all channels we sell in.  We have confidence that the Kathmandu brand and its product  range can have wider growth potential internationally, and  we are going to test this going forward with greater focus in  the UK market initially. Our development of a path for global  growth of the Kathmandu brand requires us to learn from the  re-organised UK business, now a relatively low cost and low  risk aspect of the business. Peter Halkett Managing Director and Chief Executive Officer