Embattled surfwear retailer Billabong has revealed a net loss of $126.29 million for 2014 fiscal half year, as it continues to fight towards a company turnaround.
The figure is a step up from from its $536.64 million loss for the same period last year.
The retailer, backed by US-based Centerbridge Oaktree Consortium, said the narrowing of debt for the six months to December 31, 2013 reflects the first steps of a company turnaround in the pipeline.
Shedding more light on Billabong's plans going forward, Billabong CEO Neil Fiske confirmed that the company's turnaround strategy is in motion and will incorporate a new organisational structure and key appointments to executive and brand teams.
“Today we detail important operational and structural changes which we expect will drive our turnaround program announced last December. We are re-aligning the organisation to the previously announced seven part strategy and have begun making key executive, operational and brand appointments.”
“I am pleased with the progress we have made. But make no mistake, this is a complex, difficult turnaround and the reforms we are putting in place will take some time to flow through to our bottom line.
“The results announced today reflect a turbulent period for the company, including significant refinancing and restructuring costs.
“The period of uncertainty before the Centerbridge Oaktree Consortium (C/O Consortium) refinancing resulted in operational instability in the Americas which has weighed on the result. We’ve moved quickly to address leadership and talent gaps, restructure poorly performing parts of the business and get back on the front foot with our sales force and key accounts,” Fiske said.
Global sales for Billabong overall were $667 million with net profit after tax after significant items highlighting a loss of $126.3 million compared to a loss of $536.6 million for the pcp.
The company's results for Australasia were ahead of the prior year. Revenue was down slightly, reflecting the impact of the store closure program offset by good performances for brand Billabong and RVCA, which both showed growth during the period. Tight cost controls also resulted in EBITDA growth of 5.6 per cent for the period.
Going forward, Fiske said he will continue to emphasise his strategy of “fewer, bigger, better” and refocusing the company on building strong global brands.
As part of this, the company to date has confirmed renewed arrangements with brand founders, key athlete sponsorship agreements and a strategic review of its multi-brand e-commerce businesses SurfStitch and Swell.
As previously reported on ragtrader,com.au, Billabong also exited its Canadian multi-brand retail operation, West 49 late last year.
Fiske said the new strategy and structure going forward aims accelerate global growth in the “big three” brands (Billabong, Element, RVCA).
The shake up has seen a string of management changes and appointments including:
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Shannan North who has has been appointed global Billabong brand president;
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Bennett Nussbaum, appointed to lead Billabong’s turnaround office, which will oversee the company’s cost reduction and restructuring initiatives; and
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Mara Pagotto, appointed as chief human resources officer.
All three will report directly to Fiske and join Peter Myers (CFO), Ed Leasure (president Americas) and Jean-Louis Rodrigues (general manager Europe) as part of the executive team. The company will detail further executive, brand and operational appointments to complete the organisational realignment in the coming months.
“In order to maximise the potential of the big three brands, we have created global brand structures reporting to the CEO. Global merchandising, marketing, design, and digital commerce will report up through the brand president or general manager. Importantly however, we are not centralising design or merchandising into any one region. Rather we are leaving design, merchandising and marketing teams in each region to be close to the market, fast, and highly attuned to customer needs,” Fiske said.
“We want global brands that are locally responsive.”
The company has also launched the previously announced $50 million, 3 for 8 Rights Issue for the prepayment of existing debt and general corporate purposes.
Billabong also confirmed that trading in the early part of the second half has been largely consistent with the first.
As a result, the group expects that the second half will begin to be impacted from the early stages of cost out initiatives, offset by the selective investments being made in capability and marketing.