Billabong half-year losses widen, US returns to profitability
Announcing the sale of bikini brand Tigerlily this week, battling surf group Billabong said net losses widened for the prior six months, as total sales for the December-half fell 9.6 per cent to AU$511 million (US$393.67 million).
Billabong said earnings before interest tax depreciation and amortisation before one-off costs fell 21.1 per cent to $29.3 million, on the back of a sales slump in Asia Pacific and Europe. The Americas, however, returned to profitability, said the group in a press release.
The Americas' earnings hit $3.4 million, returning to the green after losses of $1.9 million last year. Sales did fall, however, down 10 per cent in constant currency terms, while gross margins improved by 170 basis points.
Asia Pacific earnings plunged 30 per cent, with comparable sales in Australia down 4.5 per cent and gross margins off 130 basis points, largely due to the weaker Australian dollar, said Billabong.
Hurt by the earnings widening, Billabong saw a net loss of $16.05 million for the six months ending December, compared with a loss of $1.58 million for the same period last year. The group said it had clocked up $10.5 million in one-off costs including redundancy expenses, adding to the woes.
Billabong said it expects underlying EBITDA from continuing operations for the full year to come in between $52 million and $57 million, compared with $57.5 million in 2016 and $65.7 million in 2015.
Billabong updated its previous guidance ($60 million to $65 million) to take into account the $60 million sale of Tigerlily, which was thought to add around $8 million this year on sales of $30 million. Billabong sold Tigerlily to Crescent Capital Partners on Thursday.
“With yesterday’s announcement regarding the sale of Tigerlily, we’re simplifying our portfolio and paying down debt. We’re seeing a strong profit lift in the Americas and our key initiatives are set to deliver substantial margin improvements. On that basis we affirm our FY17 EBITDA guidance, adjusting for Tigerlily," said Billabong CEO, Neil Fiske.
“Next, we are seeing forward gross margins improving in every region, as the benefits begin to flow from our global sourcing and concept to customer initiatives. Leaner inventories and the absence of any further currency pressures that have impacted recent results in Asia-Pacific and Europe also give us confidence," he added.
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