‘Simplified’ Billabong tips rebound
GOLD Coast surfwear giant Billabong is hanging out for a second-half rebound after blowing out to an even wider loss. Billabong chalked up a first-half net loss of $16.1 million, compared to $1.6 million a year earlier. Total group sales were down 5.8 per cent to $508.3 million. Billabong shares closed 3¢, or 2.4 per cent lower, at $1.22. Chief executive Neil Fiske said the retailer was hit by tough conditions in Asia Pacific and Europe which dragged down a “standout” Americas result. Mr Fiske said the result was in line with its warning at the November annual meeting that first-half revenue would be “substantially” down but Billabong would see a much stronger fullyear lift. He said the strong profit lift in the Americas gives the group confidence as it enters the “seasonally bigger second-half”. Mr Fiske said Billabong was seeing gross margins improve in every region and cost savings increase as the group moves to simplify its business. “We’re seeing a strong profit lift in the Americas and our key initiatives are starting to deliver substantial margin improvements,” he said.
Asia Pacific was hit by bad weather in October, currency headaches and “very challenging retail conditions” caused by heavy discounting, down 4.2 per cent in Australia and 3.7 per cent in the Asia Pacific.
Europe was affected by cooler weather and uncertainty in the wake of Brexit.
Mr Fiske said the lift in the Americas provided Billabong hope of recovery after revenue there more than doubled and gross margins were up 170 basis points.
He said Billabong was “well aware” its results missed the mark which, he said, “validates our decision to simplify the business”.
“We’re making good progress and starting to see the benefits of all our hard work. We’re looking forward to a much improved second-half.”
Mr Fiske said the group recorded big growth in its social media presence, up 33 per cent to 34 million social media followers globally for its brands and athletes.
On Thursday, it plans the global launch of Warhol Surf, a collaboration between Billabong and the Andy Warhol Foundation, in which rarely seen imagery, art and writings from the Warhol archive will be displayed.
Billabong now expects underlying earnings for the full year to come in between $52 million and $57 million.
Billabong updated its previous guidance of $60 million-$65 million to take into account the $60 million sale of Tigerlily to Crescent Capital Partners on Thursday. Tigerlily was expected to contribute about $8 million this year on sales of $30 million.
Mr Fiske said the sale is part of the group’s move to concentrate on its three big brands: Billabong, Element and RVCA.