Total Group sales of $508.3 million were down 9.5 per cent year-on-year, and down 7.6 per cent on a constant currency (cc) basis.
Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) adjusted for significant items was $29.3 million, down 21.1 per cent.
The surfwear brand said EBITDA was up 159 per cent in the Americas but weak retail conditions in Asia-Pacific and Europe weighed on its result.
In a statement today, Neil Fiske, Billabong’s CEO, said the financial results for the six months ended 31 December 2016 result is consistent with the update to shareholders at the Annual General Meeting in November, namely that the first half would be substantially down but that an expected lift in the second half would push full year EBITDA to be ahead of the prior period on a comparable basis.
“With yesterday’s announcement regarding the sale of Tigerlily, we’re simplifying our portfolio and paying down debt,” said Fiske.
The group’s previous guidance of EBITDA in the $60-65 million range for the 2017 financial year is now $52-57 million, accounting for the sale of the Tigerlily brand which is expected to reduce continuing business EBITDA by approximately $8 million.
“We’re seeing a strong profit lift in the Americas and our key initiatives are set to deliver substantial margin improvements”.
Total sales of $508.3 million were down 5.8 per cent.
Billabong said the standout result was in the Americas, where EBITDA before global allocations more than doubled to $10.3 million (up $6.2 million or 152 per cent), with earnings momentum extending into the second half on the back of margin growth of 170 basis points and lower costs.
Comparable direct-to-consumer revenue (including e-commerce and bricks and mortar stores) was up 5.8 per cent cc to $57.9 million for the half. Revenue from e-commerce grew 22.7 per cent in the half, driven by a 41.5 per cent pcp gain from Brand Billabong in North America, and now accounts for 8.3 per cent of total sales for the region.
The surfwear group said its recent AGM update detailed the weakness in APAC sales to October “and this flowed on to impact wholesale repeat orders in the second quarter”.
Australian dollar fluctuations against the US dollar impacted gross margins by about 170 basis points, representing a $4 million increase in cost of goods compared to the pcp.
The European pattern of trading was the opposite of that in the Americas, with a solid first quarter followed by a softer second quarter due to weaker demand in winter-weight categories.
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