SYDNEY–Australian surfwear company Billabong has revised its full year earnings guidance following Thursday’s sale of the Tigerlily swimwear brand for $46 million and after losses widened in the first half.
The company announced Friday it had posted a 16.1 million Australian dollars or $12.1 million net loss for the six months to December 31, after revenue declined 9.6 percent to 511 million Australian dollars or $385 million, at average exchange for the period.
This compares with a loss of 1.6 million Australian dollars or $1.2 million in the previous corresponding period. One off costs of 10.5 million Australian dollars or $7.9 million for the period included restructuring and redundancy costs.
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Group earnings before interest, tax, depreciation and amortisation, before one-off costs, were 29.3million Australian dollars or $22.1 million down 21.1 percent.
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Overall gross margins were flat. Billabong’s shares closed Friday down 2.4 percent or three Australian cents at 1.22 Australian dollars or $0.94.
Earnings in the Americas rose triple digits to 3.4 million Australian dollars or $2.6 million, from a loss of 1.9million Australian dollars or $1.4 million in the previous corresponding period. Sales declined 9.5 percent on a constant currency basis, which the company in part attributed to the sale of the Sector 9 skate brand and store closures.
Europe EBITDA fell 51 percent to 3.8 million Australian dollars or $2.9 million, with same store sales down 2.2 percent, dented by the late arrival of cold weather and Brexit unease.
In Asia Pacific, EBITDA fell 30 percent to 20.6 million Australian dollars or $16 million. The region’s results were impacted by fluctuations in the Australian dollar against the greenback and notably, a weak trading month of October in Australia, where same-store sales fell 16 percent that month due to an unseasonally cold Spring.
For the half year across the Asia Pacific region, bricks and mortar same store sales were down 3.7percent and in Australia, down 4.2 percent.
Asia Pacific ecommerce sales grew 17.7 percent and the Billabong brand ecommerce revenues were up 41.5percent on a constant currency basis in north America.
Following Thursday’s announcement of the Tigerlily sale, in order to pay down debt, the company also adjusted its 2017 financial year guidance from 60-65 million Australian dollars or $45-49 million to between 52-57 million Australian dollars or $39-43 million for 2017, excluding significant items.
Pursuant to a shareholders update delivered at Billabong’s annual general meeting in November, which flagged the H1 loss, chief executive officer Neil Fiske said the company expects to see a lift in the second half, fuelled by the profit lift in the Americas and key initiatives.
One of these initiatives is Warhol Surf – a Billabong collaboration with the Andy Warhol Foundation for the Visual Arts, for what Billabong is touting as its first dual gender global collection.
Due to be unveiled on March 2nd, the collection will feature rarely seen imagery art and writings from the Warhol archive.
“The product line looks absolutely amazing and we’re all very excited about it, as are our premier retail partners” said Fiske in an analysts call Friday. “The Warhol collaboration is more than a new product line, it represents the kind of energy, creativity and innovation we are generating from our global brand leadership model”.