Divorce hurts for retailer

BILLABONG shares have slumped after the struggling Gold Coast surfwear retailer said it would take an $11.7 million hit to part ways with a service provider.

The group announced yesterday that it was terminating its contract with a service provider it had engaged to integrate its wholesale, retail stores, e-commerce and social media platforms online.

Its shares tumbled in the wake of the revelation before closing down 6¢, or 7.3 per cent, at 76¢ yesterday.

Billabong said that despite the write-off, it remained committed to rolling out its “omnichannel solution” – part of a strategic turnaround plan carried out over the past 18 months.

The company said it expected to do so close to its original budget estimate.

It expects the first of its new websites, Surf Dive ’n’ Ski, will be launched before the end of the year.

In February, the group downgraded its full-year earnings forecast after its first-half loss blew out to $16.1 million.

The retailer said at the time it expected full-year earnings before interest, tax, depreciation and amortisation of $52 million-$57 million, compared to a previous forecast of $60 million-$65 million.

Billabong had flagged that full-year earnings would rely heavily on the second-half, when its Americas business was expected to pick up significantly.

Earlier this year the company completed the sale of its Tigerlily swimwear business for $60 million to Crescent Capital Partners. The retailer said it wanted to concentrate on its big three brands: Billabong, RVCA and Element.