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Wednesday, August 29, 2012
Billabong posts $275.6 million loss

By Keith Hamm

Even as surf apparel giant Billabong wrapped up another successful live webcast from Tahiti earlier this week -- with viewers worldwide treated to a high-scoring final at near-perfect Teahupoo -- the company's voyage through uncertain economic seas during the past year hit another rough patch.

On Monday, Billabong International, which has been traded on the Australian Securities Exchange for 12 years, announced an unexpectedly large $275.6 million loss at the close of the fiscal year on June 30.

On a positive note, "At an underlying trading level, [Billabong] remains profitable," CEO Launa Inman said in a statement, adding, "[we've] been adversely impacted by various significant and exceptional items."

By that she means Billabong suffered from lean earnings as weary consumers weathered global recession, and the company sold off new stock at a cut rate to offset debt, among other factors spelled out in the press release.

Billabong, which employs roughly 6,000 people worldwide, has also closed "under-performing" stores -- shuttering 58 retail outlets since February, with another 82 set to close over the next 12 months.

The brick-and-motor slim-down is part of what the company is calling its forthcoming "transformation strategy," outlined in a 47-page document released alongside the news of its financial woes.

Citing Billabong's relatively good reputation with consumers, the plan's key to unlocking the company's value can be found in simplified retail strategies (including beefed-up online commerce), a leveraging of its other key brands (specifically Element, RVCA, and Dakine), and the globalization and integration of its supply chain.

As the plan aims to return Billabong International to the realm of positive sales growth over the next four years, U.S.-based private investment firm TPG's latest bid to buy the company came in at $1.45 a share in July, down from its February offer of $3.30 per share.

Billabong founder Gordon Merchant -- its largest shareholder -- has said TPG undervalues his company.