Billabong gears up for profitable year

Published on Wed, 26/10/2011, 03:00:42

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Surfwear company Billabong says despite subdued retail conditions in Australia, the company is on a track record on improving its overall performance

The company has reported that total sales for the September quarter were up 24.7 per cent over the same period in the prior year. Meanwhile, global sales of $1.68 billion were up 13.6 per cent, driven largely by the first-time inclusion of some acquisitions.

“Overall, it is interesting to note that retail sales in areas including Sydney remain reasonably weak, as does the Group’s lower-margin outlet store business,” Derek O’Neill, Billabong CEO, said.

“It is encouraging, however, that the areas where the Group has been investing – the full-price direct-to-consumer channel, which includes company owned bricks-and-mortar retail and online business – generated positive comparable store sales growth in the first quarter.”

Overall, the group’s direct-to-consumer business recorded positive comps around 3 per cent to 4 per cent in the first quarter and is beginning to see some vertical margin flow through as summer has presented the first opportunity where the group has had full control of the selection of products on the floor in acquired retail businesses.

The company also highlighted that the small number of acquired retail stores that have undergone a refit are generating double digit increases in sales per square metre.

“I have recently been through a number of stores and I have found the Billabong Group’s ranges to be among the strongest I have seen and, while the Group is still dealing with the final parts of the integration of retail warehouses and IT platforms, this places the business in a good position heading into the important retail months of November, December and January,” O’Neill said.

In terms of its online business, including SurftStitch is expected to be in the range of 7 per cent of overall Australian sales in the current financial year.

“This shows that Australians are confident to shop at proven and trusted domestic online platforms,” O’Niell said.

 


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