QUEENSLAND: Billabong has defended its profit loss for the 2008/09 financial year, stating that brand image preservation was a key focus in the downturn.
In an address to shareholders, chairman Ted Kunkel said it was necessary to contextualise its 9.2 per cent drop in net profit after tax within the dramatic global financial conditions.
"This created some challenges for Billabong, the key one being the consumer slowdown and its subsequent impact on inventory levels, ordering patterns and discounting throughout the retail channel," he said.
Kunkel said the financial results did not tell the whole story of the company's performance and stated it was important to consider the plans put in place for the future.
CEO Derek O'Neill said the primary issue for the surfwear brand was the impact of reduced US consumer confidence and the flow on consequences for the retail sector.
He said that despite diminished sales, Billabong had sought to hold traditional pricing structures to maintain brand integrity. He said the company did not panic and take dramatic quick fixes in an uncertain environment, but focused on medium to long term outcomes.
O'Neill believed the company was in good structural and financial shape to regain momentum when consumer recovery takes hold.
He forecasted a strong second half to the current financial year, due to cost reduction programs and stronger foreign currency hedge rates for product purchases in Australia and Europe.