Billabong swings to full-year loss as tax charge wipes out revenue gains

A year after posting its first profit in four years, a hefty tax charge has pushed the surfwear brand back to a loss.

A Billabong store in Burleigh. (Adam Head)

Surfwear brand Billabong International has swung to a full-year loss after a tax credit it benefited from last year was not repeated.

Billabong (BBG) reported a net loss of $23.7 million in fiscal 2016, compared to a profit of $4.2m in the previous year.

The group attributed more than two thirds of the decline to a higher tax expense, booking a tax expense of $7.8m this year compared to a $12.2m tax credit in the prior year.

Revenue rose 4.5 per cent to $1.1 billion in the year.

Results for fiscal 2017 will be affected by Christmas trading in the Asia Pacific and the consolidation in the North American retail market, Billabong said.

A number of retailers in the US have reported less than rosy results and announced plans to close stores as they deal with the challenge of online sellers such as Amazon.

Billabong chief executive Neil Fiske said the company had made “significant progress” in the last year.

“The big three brands Billabong, Element and RVCA all grew and gained share in key markets, we improved the cost base and simplified the business further, and comparable retail revenue increased with ecommerce sales up 52 per cent,” Mr Fiske said.

“Against a backdrop of global uncertainty and industry change, we continue to focus on the levers within our control, including inventories, initiatives to lift margins, cost of doing business and quality distribution.”

The company is focusing on an omni-channel strategy that includes retail stores, ecommerce and social media, he said.

Billabong has been undergoing a transformation after private equity firms Oaktree Capital and Centerbridge Partners took a large stake in the company three years ago following sizeable losses. Last year’s profit was its first in four years.

Billabong declined to pay a final dividend.