Billabong blues

“Billabong” is defined as a stagnant body of water attached to a waterway. It always puzzled me why it was chosen as a surfwear brand.

Okay, it was very Australian, existing since Mr Onceajolly started stealing jumbucks.

But now the stagnant part really applies. Its turnover has dropped by seven per cent; profit by 331 per cent and EPS a whopping 600 per cent to produce a $276 million loss at last count.

Riding her trouper’s thoroughbred, latest CEO Launa Inman has trotted up and proclaimed a set of sweeping changes that may, at any time, be out of date because companies interested in taking it over have divers groping around the muddy bottom of the billabong.

A snapshot of Billabong shows a corporate mess. In good times, with profits flowing, the mess would have been praised as brilliant diversification. But not so these days.

Billabong International Limited's core business is quoted as the marketing, distribution, wholesaling and retailing of apparel, accessories, eyewear, wetsuits and hardgoods in the board sports sector. They trade under the Billabong, Element, Von Zipper, Honolua Surf Company, Kustom, Palmers Surf, Xcel, Tigerlily, Sector 9, DaKine and RVCA brands.

It employs about 6000 people, is sold in over 100 countries and is available in about 11,000 retail establishments.

If I’d been Launa I would have taken a supersonic jet in the opposite direction when offered the job. But there may be a clever strategy here.

A takeover would almost certainly not include Launa, especially after her, ahem, unfortunate time at Target.

Ergo, a nice payout would come her way while she goes back on the available exec market.

Anyway, enough of Launa.

Let’s talk about the secret behind the surfwear market. Quicksilver, Ripcurl and Billabong all had surfie backgrounds. They were conceived in salty air and crashing surf.

Their clothes were for surfing, so they were tough rather than pretty. They were available in surf shops, run by surfie people too.

There were not too many of them, either. Part of being dressed in cool surf wear was its rarity. It didn’t appear in department stores, chains or even sports stores. And it certainly didn’t have a string of its own shops.

Then commercialism stepped in, and Billabong was probably the leader among the growth-led surf wear brands. If it had stayed small it would have gone on forever.

But that’s not how the marketers think. We must grow and keep growing. We must employ professional managers who know about expanding numbers.

This will attract more opportunities, more brands, more fame, more growth and more money. At some point, Billabong ceased to be a hard-to-find surf wear product and became an international basket of in-your-face brands, each with its own management team.

And as such, it faced similar problems to those confronting Pacific Brands right now.

Can the Billabong egg be unscrambled? Maybe, but only if there is deep and drastic surgery to return the brands to an entrepreneurial base.

Each brand would have to be given to a fiery manager/part-owner and made exclusive again. That’s a tough call because the core brand, Billabong, has gone viral and probably disqualified itself from the ‘in’ club.