Billabong moves to H1 loss on US weakness
- H1 loss of AUD1.6m (US$1.15m)
- Weakness in American market
- Sales grow 7.6% to AUD561.9m
Billabong has moved to a loss in its first-half
Australian surfwear company Billabong has moved to a loss in its first-half as a result of declines in North America and a weaker Australian dollar.
The group's net loss amounted to AUD1.6m (US$1.15m) in the six months to the end of December from a profit of AUD25.7m in the prior year period, despite sales growth of 7.6% to AUD561.9m.
The overall result was impacted by the Americas, Billabong's largest market, where sales were down 4.8% to AUD219.9m. Group gross margins were also impacted due to pressures from excess inventory which followed the West Coast US port strike early in 2015.
In Europe, revenues climbed 11.5% to AUD98.1m, while Asia Pacific sales grew 2.8% to AUD243.9m.
The group's big three brands grew in wholesale equivalent revenue, with Billabong up 2.6%, Element up 9.1%, and RVCA up 20.6% on a constant currency basis.
Billabong is in the midst of a turnaround, which has involved cost cutting measures, supply chain restructuring, ordering and e-commerce systems, overhauling its product range and refurbishing stores.
In November, CEO Neil Fiske warned that trading conditions had deteriorated since the end of 2015 and that earnings would come under pressure in the short term.
In today's (26 November) update, he said: "This is a brand-led turnaround and our big three brands, where we placed our focus, grew globally. Europe continues to gain momentum and the Asia Pacific region has delivered a solid performance given currency pressures."
"The result has been impacted by conditions in the Americas, as highlighted in our November update, including sector weakness in retail and short-term margin pressures associated with clearing excess inventory. As we get inventories back in line, we believe margins will recover."
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