AUSTRALIA: Billabong to shut stores despite TPG bid
- Net profit down 71.8% to A$16.1m
- Sales up 1.5% to $847.2m
- Confirms TPG offer
- Announces strategic review and partial sale of Nixon
Surfwear company Billabong today (17 February) confirmed it has received a bid from buyout firm TPG Capital - and is set to close as many as 150 stores amid falling first-half profits.
TPG Capital has offered A$3 per share, valuing the company at around AUD765m ($822m). However while talks continue, Billabong will proceed with the partial sale of its Nixon brand to try to bring some stability to its balance sheet.
Details of the offer came as Billabong said it is also reviewing its retail network, launching a cost-cutting programme, and reducing its dividend.
Of the 677 company-owned stores, it expects to close between 100-150 underperforming shops. Some have leases that are set for renewal by 30 June 2013, and Billabong will either not renew or accelerate the exit of these leases.
It expects to reduce rent expenses by AUD20-30m, and increase EBITDA by $5-10m. The store closures will lead to some 400 job cuts globally, including 80 in Australia.
It is also working to reduce costs across all areas of the business, including head office overheads, supply chain rationalisation, retail corporate overheads and streamlining marketing spend.
The changes were announced as the company booked a 71.8% slump in net profit to AUD16.1m in the six months to 31 December. It largely attributed the decline to a AUD15m impairment charge relating to its South African business.
Sales were up 1.5% in Australian dollar terms to $847.2m, or up 6.3% in constant currency terms.
EBITDA fell 21.7% to $74.1m due to lower than anticipated sales in November and early December and gross profit pressure from higher product costs. It also said it faced a highly promotional environment in both wholesale and retail in Australia, Europe and to some extent the US.
Featured reports from just-style's research store this week include the prospects for India's texile and clothing industry, a look at footwear in Malaysia and SWOT analyses on Billabong and Gap Inc....
Billabong has agreed to open its books to private equity firm TPG Capital, but said it does not believe the AU$694m bid reflects the "fundamental value" of the Australian surfwear brand. ...
Billabong has received a second offer from private equity firm TPG Capital at a much lower price than previously offered for the Australian surfwear brand. ...
Sporting goods giant Nike is rumoured to be a potential buyer of Australian surfwear brand Billabong....
- Yarn-forward rules weigh on Vietnam TPP potential
- Is China really going through a slump?
- TPP likely to lead to rise in US apparel imports
- Footwear to see "significant" gains from TPP
- Can supplier ratings reform purchasing practices?
- Gap to close 75 stores amid "disastrous" Q1
- H&M criticised for India, Cambodia labour abuses
- US Q1 in brief: Buckle, Destination XL
- Victoria's Secret discontinue swimwear to simplify
- Labour may limit Malaysia TPP apparel shipments