Monday, August 27, 2012

Asia This Day:Billabong Struggles With Tough Conditions

Australian clothing retailer Billabong has suffered its first fiscal year loss since going public in 2001.The group reported the net loss of 275.6 million dollars,and a revenue decline of 7.6%,on Monday.At the same time,it claimed a net profit ex-items of 33.5 million on global sales of 1.55 billion.
The group had hired Goldman Sachs to analyse its situation.Among its problems were poor sales in Europe and Australia;online competition for its brick and mortar stores;and rising raw materials costs.At its height,it operated about 700 stores worldwide.
CEO Laura Inman said that,at an underlying trading level,the Group remains profitable.As previously flagged to the market,the Group's results have been adversely impacted by various significant and exceptional items.In response,the Group has endeavoured to adopt a conservative position,implementing initiatives that will target both cost savings and revenue growth.
Billabong has sold part of its Nixon accessories brand;closed 58 underperforming stores;and reduced costs.It has also identified a further 82 non-performing stores for closure in FY 13.Cost savings of about 30 million are expected to be realised in 2013 from initiatives implemented in 2012.
The Group intends to simplify its business;leverage its Billabong brand;realise the strategic potential of retail;continue to expand Billabong's global e-commerce platform;and globalise and integrate the supply chain.The current challenging trading conditions are expected to continue in FY 13.
There will be no final dividend for FY 12,and none are expected to be paid for the first half of FY 13.Billabong had sold a 48.5% stake of its Nixon brand to Trilantic Partners,plus a further 3% to management,in order to stabilise its balance sheet and fend off an unsolicited bid by TPG Partners.
Billabong produces and markets sportswear and casual clothing,including surfwear,outerwear and accessories.
Billabong International Ltd(ASX:BBG),Goldman Sachs(GS)

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