NATIONAL: Listed surfwear giant Billabong has slashed its earnings forecast and announced a $290 million capital raising scheme as conditions in the US market continue to plague its bottom line.
The scheme was in the form of a two-for-11 entitlement offer of $7.50 a share, a 29 per cent discount to Billabong's trading price last Thursday.
A fully underwritten component of up to $200 million would be raised from institutional investors while a retail offer would raise an additional $90 million.
Billabong said the offer was aimed at reducing the level of outstanding debt.
The company also reduced its full-year earnings forecast today, with $160 to $165 million expected in net profit for the year ended June 30. This was down from $176.4 million on last year.
Rapid deterioration in the US market meant comparable store sales were down by up to 20 per cent over late April and early May. A reduction in forward orders within the company's US wholesale base, along with the strengthening of the Australian dollar, had also played a role in the earnings downgrade.
Chief executive Derek O'Neill said it was prudent the company was well positioned to address the current "volatile" market.
"The accelerated entitlement offer of up to $290 million will improve Billabong's balance sheet and provide further flexibility for the company over the medium term."