Billabong International announced a detailed turnaround strategy today, Monday August 27, along with its full year financials for the 12 months ended June 30, during which the company saw a net loss after taxes of AUD $275.6 million.
The company attributes the loss primarily to one-off charges that amounted to AUD $336.1 million, net of the partial sale of Nixon, including the closure of underperforming stores and impairment charges.
Billabong says that excluding these “significant and exceptional charges,” the group remains profitable and adjusted net profit after tax was AUD $33.5 million with global sales of $1.55 billion, which was down 7.9%, despite online sales growth of approximately 50%.
"At an underlying trading level, the Group remains profitable,” according to CEO Launa Inman. “As previously flagged to the market, the Group's results have been adversely impacted by various significant and exceptional items. In recording the various significant and exceptional costs and charges, the Group has endeavoured to adopt a conservative position. The Group is well on track in implementing the initiatives outlined in the previously announced Strategic Capital Structure Review and will continue to implement a number of new strategic initiatives announced today as part of Billabong's Transformation Strategy. These initiatives will target both cost savings and revenue growth."
Billabong, whose shares have slumped 75 percent in the past 18 months, is still in talks for a AUD $694 million ($723 million) private equity bid from TPG, stating today that talks with TPG were continuing, but declined to give further details. According to Reuters, TPG has not begun to examine Billabong’s books yet.
Billabong’s Transformation Strategy
Billabong also released a detailed “Transformation Strategy” highlighting the group’s inherent value and how it will unlock that value to return the company to profitability. Over the next four years, the company aims to deliver earnings 2.5 times higher than FY 2012 by focusing on the following:
– Simplifying its business
– Leveraging Brand Billabong
– Leveraging other key brands
– Realizing the strategic potential of retail
– Continuing to expand Billabong's global e-commerce platform
– Globalizing and integrating the supply chain
The plan, which is available in its entirety below, outlines steps to achieve this including focusing on growing the RVCA, Element, and Dakine brands, significantly reducing the number of styles offered, extending Billabong’s reach, focusing heavily on the design team, implementing new retail formats, and continuing to close underperforming stores, including 82 in FY 2013.