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Billabong losses deepen despite US momentum

BillabongBillabong International’s half-year net-loss has deepened by 29 per cent over the prior period to $18.4 million as momentum in America was more than offset by declining earnings in Europe and Asia Pacific.

The international retail business booked an earnings before interest, tax, depreciation and amortisation (EBITDA) decline of 19.1 per cent year-on-year (YoY) to $19.3 million for the six-months ended 31 December.

While first-half earnings from the Americas increased by 34.1 per cent, EBITDA in Europe fell 29.4 per cent in Europe and 9.2 per cent in Asia-Pacific YoY.

Despite the performance chief executive Neil Fiske said the result was in line with guidance provided in January and that second-half trading would be more positive, sticking to his full-year EBITDA guidance of between $51.1 – $54 million.

“The results we are reporting today are consistent with the updated guidance given in January – namely that we would be down in the first-half, but expect to be up in the second,” Fiske said.

“The result is reflective of the ongoing difficult trading conditions in retail and much of the action sports sector.”

Despite committing to a better performance in the second-half, Fiske said that the “systemic and structural changes” in retail mean that conditions impacting the first-half are likely to prevail in the second-half and beyond.

On the back of the result today chairman Ian Pollard reiterated his recommendation that shareholders accept a purchase offer at $1 per share from competitor Boardriders Inc.

Sales fell by 1.5 per cent on a constant-currency basis to $474.5 million, with a 3.9 per cent increase in top-line sales in America offset by a 4.5 per cent decline in Asia Pacific, as slightly positive retail sales (1.3 per cent) were weighed down by a 16.6 per cent decrease in wholesale revenue.

APAC bricks-and-mortar retail comparable sales were up 0.9 per cent for the half, but challenging retail conditions locally saw Australian comps fall 0.6 per cent.

Europe booked top-line sales growth of 6.1 per cent on a constant currency basis, but comparable sales were down 2.3 per cent, which was below expectation.

Gross margins across the group increased from 51 to 52 per cent, led by expansions across all regions as product initiatives began to kick in.

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