Kathmandu Holdings has defied a weak retail sector to post a 27 per cent increase in profit, and plans to open 15 new stores this year in search of even stronger results.

The New Zealand and Australian listed outdoor goods retailer made a net profit of $NZ44.2 million ($A39.79 million) in the 12 months to the end of June, up from $NZ34.9 million last year, thanks to stronger sales and lower costs.

Investors cheered the result, a rare piece of good news from a retail business in the current climate, sending Kathmandu shares 11 per cent higher to a record high of $2.85.

Kathmandu chief executive Peter Halkett expects Australian retail to remain subdued for the next 12 months, but hopes the company can lift sales and profit during the year.

“We believe our growth strategies are working, we believe our business model is clearly robust and we don’t see any reason, if the environment was to stay as it is, why we wouldn’t deliver another really solid outcome.”

The company, which operates in Australia, New Zealand and the UK, added 16 stores to its network during the 2013 financial year and plans to open another 15 this year.

Mr Halkett put the strength of the 2013 result down to the company’s business model and the opening of new stores.

“We are vertically integrated so we control the brand, we control the product, we control the product team and we sell it through our own stores and I think, if you look globally, that vertical format is proving very successful,” he said.

He said the company was also fortunate to be involved in the outdoor goods category, which continued to outperform other areas of the retail sector.

“We clearly wouldn’t be doing so well if we weren’t in the outdoor category,” he said.

The opening of new stores helped lift total sales to $NZ384 million, up 10.6 per cent on last year.

Same store sales growth was up 5.6 per cent at comparable exchange rates.

Meanwhile, the company’s gross profit margin remained relatively steady at 63.0 per cent.

Mr Halkett said the company had also cut its operating expenses 30 basis points as a percentage of sales.

“We were successful in reducing operating costs as a percentage of sales,” he said.

“This continues to be a key priority and we are confident Kathmandu will achieve further efficiency improvements in the future,” he said.

The company declared a final dividend of nine NZ cents.