Billabong International has revised its net profit after tax (NPAT) expectations for 2010/11 citing the impact of Japan's earthquake and tsunami on its retail and wholesale base in the country.
Billabong revealed that while its staff, offices and warehouse in Japan survived the March 11 quake and resulting tsunami without sustaining physical damage, it had closed 19 company-owned retail stores due to damage, loss of power or standard earthquake and tsunami evacuation procedures.
“As of today [March 16], 18 company stores remain closed,” Billabong said.
The company added the impact on Billabong's 500 wholesale accounts in Japan was “extremely difficult” to determine. Early information suggests “many” stockists are closed.
Billabong revealed that in a regular trading year, two thirds of the company's overall annual profit in Japan is generated between March and June.
“...[T]he company is now assuming that there will be a significant shortfall in sales that were previously expected in this period. Some insurance is in place in Japan and while there is an expectation that some monies will be recovered, this is highly unlikely to occur in the current financial year,” Billabong said.
The fall out from the Japanese quake and tsunami, in combination with the effects of New Zealand's February 22 earthquake, has seen the company drop its NPAT expectations from an anticipated flat rate of growth on the prior year to a two to six per cent drop in NPAT on the prior year in constant currency terms.
The company said Japan had contributed approximately four per cent of Billabong's global sales revenue in 2009/10.
Billabong International currently trades in over 100 countries worldwide with brands under its ownership including Element, Von Zipper, Kustom, Nixon, Tigerlily, DaKine and Billabong.