SURFWEAR retailer Billabong (ASX: BBG) has posted a full-year net loss of $77.1 million, more than triple its loss from last year, and its underlying earnings have missed the lower end of its guidance range.
Billabong, which suffered a near death experience four years ago after posting an $860 million loss, says weak consumer spending and an outmoded bikini range in Australia led to it falling short of its guidance range for FY17.
The Gold Coast-based company's $51.1 million in earnings before interest, tax, depreciation and amortisation (EBITDA) was up 2.8 per cent on the previous year but this was below Billabong's forecast of EBITDA between $52 million and $57 million.
Revenue was down 8.9 per cent to $979.45 million and CEO Neil Fiske pointed to weak retail conditions in Australia as a major contributor to the results.
"If not for the widely reported weak retail conditions in Australia we would have been well up in the (forecast) range," Fiske says.
Fiske says the company is poised for a major turnaround thanks in part to the strong performance from the Americas which recorded a rise of 46.9 per cent in pre-tax earnings for FY17.
"These results reflect the tangible progress we are making in implementing our turnaround strategy in all regions, particularly in the Americas and Europe," Fiske says.
Europe rebounded from a soft first half to post full year EBITDA growth of 8.9 per cent.
In the Asia Pacific region, which includes Australia, EBITDA dropped $9.2 million or 28.3 per cent on an 8 per cent revenue decline, weighed down by higher promotions and clearance markdowns and a failure to follow the trends in women's swimwear in the US market.
While Billabong may be heading in the right direction, all indications are that the glory days of surfwear-as-lifestyle retail are well and truly over.
Billabong's woes are symptomatic of the rapid and dramatic decline in recent years of the multi-billion dollar surfwear clothing retail market, which for decades could seemingly do no wrong.
In the 1960's surfing was anti-establishment and 'cool' and labels including Billabong, Rip Curl, and Quiksilver established themselves as lifestyle brands for surfers and non-surfers who were keen to literally buy into the culture.
The industry started to 'go over the falls' in 2012 when Billabong reported a net annual loss of almost $300 million and the following year that blew out to a massive $860 million.
In 2015, Billabong reported a small profit before going back into the red last year with a $23.7 million loss.
Quiksilver filed for bankruptcy in 2015 after a series of failed acquisitions while just last week online retailer Surfstitch entered voluntary administration because of a series of protracted legal entanglements and investigations into its heavy loss-making activities.
Through it all Rip Curl is one of the few surf brands which has maintained profitability, perhaps because it has avoided the pressures that come with being a listed company.
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