Wipeout avoided but Billabong still riding long wave back to success

BILLABONG believes it has wiped the word “wipeout” from the headlines but still faces a long ride to redemption.

DECEMBER 6, 2006: Australian surfer Joel Parkinson surfs for victory at the O'Neill World Cup of Surfing title at Sunset Beach, Hawaii 06/12/06. Parkinson posted the only perfect 10 points score of the entire contest during the final. The O'Neill World Cup of Surfing is the final event on the 2006 ASP WQS season. Surfing A/CT

BILLABONG believes it has wiped the word “wipeout” from the headlines but still faces a long ride to redemption.

The Gold Coast-based surfwear retailer says it’s seeing early signs of progress across most of its markets as its turnaround plan gains traction.

Chairman Ian Pollard said the word “wipeout” had been replaced by “re-acceleration”, a term he picked up playing Scrabble but which has nothing to do with surfing.

“There is, however, enormous work to be done in rebuilding the business, particularly in the Americas, which is our largest market,” he said.

“We remain confident that the actions we are taking now will be rewarded in improved earnings for shareholders but ... this is a complex turnaround in a business with long lead times.”

Chief executive Neil Fiske told shareholders at the annual meeting at Jupiters Casino at Broadbeach his seven-point turnaround strategy was showing indicators of success but it was too early to forecast half-year earnings.

“This is a period of enormous change and transformation at Billabong ... and I’m pleased to report that we are making good progress,” he said.

Billabong CEO Neil Fiske says the turnaround strategy is showing signs of success but there’s a long road ahead. Picture: Scott Fletcher

He said bedding down nine of 10 new senior executives who had been with the company less than two years remained its greatest challenge.

It would also take between three and five years to move to one global e-commerce platform from a messy decentralised regional model.

But the company, which made a $234 million net loss for 2013-14, an improvement on the $859 million loss the year before, had “accomplished a great deal in the past year”.

Even normally dour Billabong founder Gordon Merchant cracked a smile, saying he had confidence in his chief executive.

“But I’m never happy; that’s just part of my make-up. I always think you can do better but I don’t think we’ve got a better (chief executive) or team than we could possibly have,” he said.

“We’re getting on with things as fast as we can but we’ve got a lot of work to do — it’s noses down and bums up.”

Shareholders approved, sending Billabong shares up 2.5¢, or 3.88 per cent, to close at 67¢.

Mr Fiske said the turnaround of Billabong in the US was “particularly heartening”, given it was the company’s largest brand and was seeing growth after years of decline.

First-quarter sales in the US grew 14 per cent and Billabong is projecting second quarter sales to be up 8 per cent, subject to no shipping delays.

Billabong founder Gordon Merchant and CEO Neil Fiske know there is work ahead but have finally seen growth after years of decline. Picture: Scott Fletcher

Mr Fiske said spring orders in the US were “very encouraging”, with forward orders up 23 per cent on last year.

RVCA sales in the US were improving after stagnating last year.

Australian retail — a significant part of Billabong’s first-half earnings — had a slow first quarter and sales will be critically dependent on December trading.

Mr Fiske said Europe was “turning the corner” and expected to return to profit this year.

However, Canada and Brazil remain in dire straits, with sales down 17 per cent and almost 25 per cent respectively.

“The Americas remain our biggest challenge and our biggest opportunity,” Mr Fiske said.

The sale of its Canadian retail chain, West 49, had been a difficult transition.

He was upbeat about Billabong’s future but warned there was much more work to do.

“There is tremendous potential to be unlocked in this business, but the combination of long lead times, historic legacies and the trauma caused by the company’s recent turmoil mean that the turnaround will take time,” he said.