• 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.