NZ shares drop in first trading day of 2019 as Kathmandu whacked on weak sales

The S&P/NZX50 dropped 78.9 points, or 0.9 percent, to 8,732.37. Within the index, 38 stocks fell, six rose, and six were unchanged. Turnover was $85.6 million.

Kathmandu sank 14 percent to $2.37, a six-month low, after saying trading fell short of management's expectations through the Christmas period, with sales down 1 percent in the 22 weeks through Dec. 30 from a year earlier. Still, it managed to improve gross margins by 60 basis points to 64 percent, and said first-half profit will probably rise 4-to-8 percent.

"Sales growth was below expectations, albeit margins were still pretty solid," said Matt Goodson, managing director at Salt Funds Management. "This is a market where, if a company disappoints, it takes no prisoners."

Heartland Group remained under pressure, down 4.4 percent at $1.32, a new two-year low. The lender has been under pressure since the Reserve Bank said it will impose tougher capital requirements on licensed banks. New Zealand Refining fell 3.8 percent to $2.26 on twice its average volume, while Mercury NZ was down 3.7 percent at $3.51 on half its average volume.