Billabong net loss narrows in FY14

REPORT_ Billabong International, announcing its full-year financial results to 30 June 2014 said that including significant items and discontinued businesses, net loss after tax for the full-year to 30 June 2014 stood at 233.7 million Australian dollars (218.6 million dollars) compared

to a loss of 859.5 million Australian dollars (803.5 million dollars) for the previous corresponding period.

With leadership and global re-organisation in place, company says that its witnessing early signs of growth in key brands in major markets returning. While turnaround is accelerating and gaining traction across the business, challenges continue to remain.

Co

mmenting on the results, Billabong CEO Neil Fiske said, “In the nine months since announcing our seven part turnaround strategy we have significantly stabilised, restructured and refocused the business. The Company has a far stronger balance sheet. We have put in place a new global organisational structure and executive team. We have begun to simplify the portfolio. We have taken, and continue to take, significant costs out of the business. The turnaround is gaining traction.”

Among those indicators was brand Billabong being on track for wholesale growth in the United States for the first time in several years based on FY15 forward orders. Billabong grew by 5 percent in the Asia-Pacific in the last six months. The region’s results were disproportionately weighed down by restructuring in Brazil and a weak Canadian action sports market.

Billabong’s portfolio of assets has changed since the previous corresponding period with the sale of the Dakine brand in July 2013, the exit of virtually all of the Group’s 48.5 percent interest in Nixon, and the sale of its Canadian retail chain, West 49. Since the end of the financial year the Group announced the conditional sale of both its 100 percent ownership of Swell.com in North America and 51 percent stake in SurfStitch.com in Australia and Europe. Excluding the discontinued businesses but inclusive of SurfStitch and Swell, global sales were up 1.5 percent in AUD terms.

By region, the Americas accounted for all of the weakness in the Group results. The Americas have operated in a challenging environment with revenues down 9.9 percent for the year in local currency terms. The Company is beginning to systematically address a range of issues and seeing early signs of improvement. The second half was heavily impacted by Canada and by Brazil, where wholesale sales for the latest half were down. Retail bricks and mortar revenues for North America were driven down in part by store closures. Comp store sales were down 6 percent for the half, reflecting weak US retail store traffic data across the industry.

Whilst the Americas were down, both Asia-Pacific and Europe saw EBITDA improvement. In the Asia-Pacific region sales for the year were up 1.1 percent with the second half sales growing 4.5 percent on a constant currency basis, compared to the previous six months. Comp store sales were also stronger in the second half, up 2.3 percent compared to just 0.6 percent in the first half. Despite some impact on gross profit margins from a lower Australian dollar during the middle of the year, overall EBITDA for the year was up 7.8 percent on a constant currency basis.

Trading to date in FY15 largely reflects the same themes as have been experienced throughout FY14. Asia-Pacific and Europe continue to trade satisfactorily, while in the Americas the company continues to confront difficult conditions. Through FY15, the company expects to see the impact of the turnaround strategy in the results.