Billabong battles big swell with $77m loss, despite strong half
Link copied to
Surfwear seller Billabong has once again posted a full year loss, partly blaming weak Australian retail conditions for a wider $77.1 million loss.
That compares with a loss last year of $23.7 million
The last time the Billabong (ASX:BBG) achieved a profit was 2015. The tide turned in 2012 when the retailer was caught with its pants down as the water went out.
Revenues from each of Billabong’s markets, Asia Pacific, Europe and Americas, were all marginally worse than last year.
“In Australia, for the year as a whole, comparable bricks and mortar store sales were down 5 per cent on the prior corresponding period, with the months of October and May particularly difficult with both being down double digits,” the company said.
Billabong also had to eat an impairment charge of $106.5 million.
In some good news, an outside researcher found that in 2016 Billabong remained the lead surf brand in the US, even though the brands contracted in the same period.
However, strategic changes set in motion in 2013 are still not allowing the retailer to draw breath.
“A number of changes to external conditions have impacted on the group such that the positive impact of the strategic initiatives outlined above have not resulted in higher overall EBITDA.
In particular, changes in foreign exchange rates and weakness among the group’s largest wholesale customers in the United States of America and Australia have impacted profitability,” the company said.
The business is focusing on the second half results, which it said helped push EBITDA up 2.8 per cent to $51.1 million.
Billabong Chief Executive Officer Neil Fiske said the company achieved its second half goals of continuing to rebuild in the US (its largest market), grow gross margins in each region and cut costs.
“This half represents the first time in three years that comparable gross margins have improved in every region, year-on-year. Gross margin expansion is a key driver of our profit improvement plan and margins were up 210 basis points for the half, and up 380 basis points in our largest market of the Americas,” he said.
Billabong shares were down 3 per cent to 73c in early trade.