Surfwear retailer Billabong has reported a 24.7 per cent increase in revenue for the first quarter and announced it is on track for significant sales growth going forward.
The company, which has recently acquired a number of retail businesses, said results for the three months to September 2011 were driven largely by the first time inclusion of some acquisitions. Sales revenue excluding acquisitions was up approximately six per cent.
At the group's annual general meeting yesterday, Billabong chairman Ted Kunkel said the group is poised for greater improvement as the shift to a vertical operating structure progresses.
“There was an acknowledgement by the group that there would be a year of transition when margins and profitability would be adversely impacted as the group evolved from wholesale supplier to the stores, to the owner of the stores,” he said.
“The group is now through its previously foreshadowed transition year and expects the benefits from the retail acquisitions to start flowing in the 2011-12 financial year.”
Kunkel added that the group has also observed a migration of consumers to online sales platforms lately and he expects the sales contribution from Billabong's own online portals to grow rapidly.
“Online sales, primarily through the Swell.com and Surfstitch.com businesses, accounted for approximately three per cent of group sales in the 2010-11 financial year and [sales] should rise in excess of 50 per cent in the current financial year,” he said.
According to Kunkel, the Billabong business in Australia is also in the final phase of migration of all retail businesses across to a common IT platform, as well as the consolidation of multiple warehouses into a single warehouse.
He said the company is also working to wrap all back office support and systems into Billabong's existing structure, but said the overall re-balancing between the wholesale and retail operations would result in some internal restructuring.
“The group already had its own retail operations ans these have been expanded and, where appropriate, duplication within the acquired businesses has been removed. So, when the acquired assets are fully integrated into the group there will be ongoing synergies in areas such as warehousing, IT and back-end services.”
Changes are also under way in the Billabong management circle, after Kunkel revealed that non-executive director Margaret Jackson is leaving the company.
“Margaret Jackson is retiring. With the currently available pool of funds there is capacity to bring up to three new directors onto the board, and the group is targeting specific retail financial and HR governance expertise,” he said.
Billabong was established the Gold Coast, Queensland in 1973. The company now trades in over 100 countries worldwide with brands under its ownership including Element, Von Zipper, Kustom, Nixon, Tigerlily, DaKine and Billabong. In the past year, Billabong has acquired a range of larger retailers including Canada's West 49 and Australian retailers Surf Dive 'n' Ski, Jetty Surf, Rush Surf and Surfection.