Billabong Takes A Massive Profit Drop for 2012-2013

Australian surfwear apparel company Billabong has declared it has incurred huge loss for the most recent financial year. While analysts predicted the company should expect a $560 million loss, Billabong posted that the actual amount is at $859.5 million, as sales dropped all across its operations in Australiasia, Americas and Europe.

In a statement issued this morning, the company said that sales in the global market had a drop of 13.5%, while its flagship stores in the Americas dropped its revenue to 5.7% or at $636.7 million.

Its European market, where general economic conditions are also struggling, sales dropped to 10.4% or about $232.1 million. Its pre-tax earnings in Europe was completely down at a massive 100.4%.

Sales in the Australasia region dipped to 6.6% or $471.8 million, but earnings did increase to 5.8% or $2.8 million.

The streetwear brand’s intangibles, brands and goodwill also took a hit, with more than triple the amount of the total market capitalisation of Billabong.

The company now sees the Billabong brand as “worthless”, despite the many strategies its chairman, Ian Pollard, had set in place so that it thrives. Downsizing was necessary to drive savings and cost, and the company even reduced its suppliers to as much as 75%.

The company is planning on reducing its European operations by 15%, while a restructure of its Australasian operations will be in order. It is also deciding on pushing its $US325 million refinancing from Altamont and Blackstone, or perhaps undertake the new propsal from Centerbridge and Oaktree.

Shareholders will be voting on the options for Billabong by October.

With its humble beginnings back in the 1970’s, Billabong has emerged as an iconic brand among the youth in the 1990’s. It earned international recognition in the 1980’s with exports to California, Europe and Japan.