The swimwear giant has announced that taxes and a tough retail market have taken their toll on Billabong during their multi-year comeback plan
The Gold Coast Bulletin has announced more troubling news concerning swimwear giant Billabong– the company has reported a $23.7 million dollar loss this year, following a $4.2 million dollar profit reported a year earlier.
The swimwear brand has faced their fair share of turbulence over the last few years, and is currently in the middle of a multi-year comeback plan. Billabong reported that more than two-thirds of its decline related to higher tax costs, and that the majority of challenges that affected the company came from external forces.
CEO Neil Fiske said that 2016 was “an extraordinarily tough year” for Billabong, and that a significant speed bump had been placed in front of the brand.
"We expects bumps periodically. We just have to absorb them and focus on our strategy.”
We have come through a year of extraordinary market disruption and dislocation, in many ways stronger, leaner and more focused yet clearly impacted by a number of factors outside our control” he said. We have further simplified the business and narrowed our focus and we are building a global platform. We have said that progress of this nature … is not necessarily going to be linear and we expect there will be ups and downs along the way."
Mr. Fiske pointed out three major external shocks that affected Billabong: a tough retail market, a decline in longboard sales (hence the sale of Sector 9) and most importantly, currency.
Both the Australian dollar and the euro have seen decline this year. Currency fluctuations took their toll on the swimwear company this year, and “hit the company's costs by $17 million in its Asia-Pacific and European market.”
Mr. Fiske said that Billabong has not ruled out shedding underperforming companies, if need be. Revenue from Billabong’s three biggest brands- RVCA, Billabong and Element, are up 5.3 per cent. Social media followings for these brands are quite large, and Billabong has expressed that relying on omnichannel shopping is a key component of their comeback plan.
Billabong also expressed that its fiscal 2017 results will be influenced by Christmas trading in the Asia Pacific and consolidation of the North American retail market.
Billabong has been sailing in troubled waters for some time now. The company has faced profit losses, class-action lawsuits from investors and a tough retail market. It will be tough to say if 2017 will be the comeback year that Billabong has been hoping for.