Billabong says weather slowed first-half sales

BillabongSurfwear retailer Billabong’s earnings in the first half of 2016/17 are expected to be substantially lower than the previous corresponding period after poor weather dented sales in Australia and Europe.

Nick Fiske, Billabong managing director, said poor weather had hurt Billabong’s sales over the first four months of the fiscal year.

“In Australia, October was particularly weak across the surf retail market as a whole,” Fiske said. “However, as weather conditions have normalised, our trading has picked up substantially in November.”

Fiske said these same weather patterns affected their wholesale accounts, with fewer re-orders across the first four months – with Billabong expecting the improving trends to extend to wholesale accounts as well.

“Based on trading to date, we expect first-half EBITDA (earnings before interest, tax, depreciation and amortisation) to be down substantially on the same period last year, due mostly to the weakness in the first four months in Australian and European retail,” Fiske said.

According to Fiske, however, full-year earnings for Billabong, which suffered a $23.7 million loss for 2015/16, are expected to be ahead of last year and in the range of $60 to $65 million.

He said the group’s US business was tracking well with positive comparable store sales, while the company was focusing on its three big brands – Billabong, RVCA and Element, cost cuts were being achieved by streamlining the business.

“I am pleased to report positive signs in the US, with EBITDA for the first four months ahead of the same period last year, and positive brick and mortar comp-store sales,” Fiske said. “However, among the big accounts in the US, one of RVCA’s major customers recently emerged from bankruptcy and is well down on previous trading levels.”

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