When Billabong announced its half-year results, it remained optimistic despite the ‘weak summer’. But now the surfwear retailer has been forced to revise its net profit after tax (NPAT) for 2010/11 as a result of that the Japanese earthquake and tsunami.
The company said that while its offices and warehouses in Japan have not suffered any physical damage, a number of its company owned retail stores and wider wholesale account base will likely to be affected.
“Billabong has 44 company owned stores in Japan and these account for approximately 60 per cent of the company’s sales revenue in the country,” it said.
A total of 19 of its company-owned stores have been closed as a result of damage, loss of power or standard earthquake and tsunami evacuation procedures but the recovery cost remains unknown.
“While it is extremely difficult to forecast the ultimate financial cost of such natural disaster and their likely effect of both wholesale customers and consumer sentiment, particularly within tourism destinations throughout the Pacific rim, the direct cost will likely result in the group’s NPAT for the 2010-11 financial year being lower than the forecast previously provided,” Billabong said.
As a result, the company has forecasted that its NPAT to be flat and to be 2 to 6 per cent lower in constant currency terms compared to the prior year.
In the 2009-10 financial year, Japan contributed approximately 4 per cent of the group’s global sales revenue and approximately 3 per cent of the groups’ EBITDA.
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