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BILLABONG INTERNATIONAL


Sector: Retail

Industry:

Long abandoned by most institutions, the surf wear apparel provider is showing the first signs of sustained financial improvement, four years after the company almost imploded.

WHY WE LIKE IT

Under CEO Neil Fiske, management has tackled almost every aspect of the business, including overhauling product sourcing, reducing the cost of goods sold, closing unprofitable stores and pushing into online sales. The company has also reduced its product lines and prioritised its 'big three' brands of Billabong, RVCA and Element. Management is reducing the debt millstone around its neck. Net debt has reduced from $185m to $148m. Reducing and restructuring debt is a key part of the ongoing turnaround because the company has a loan facility with major shareholders Oaktree Capital and Centerbridge, on which it pays interest of 11.9%.

WHAT'S NEW

The surf wear apparel provide's full-year FY17 results in late August show the company's turnaround is a work in progress, but one that's gaining momentum. Despite a local fashion fail in misreading a key bikini trend, Billabong generated strong underlying EBITDA of $51.1m, which was up 2.8% in constant-currency terms and also made inroads in reducing debt. The bottom line loss of $77m largely reflected a $106.5m impairment of goodwill and brand values. This was partly offset by a $47.8m gain on the sale of the Tigerlily swimsuit business, acquired by Billabong in 2007 for $5.8m. The group expects this year's EBITDA to exceed last year's $51m and cites the improvement in the second half that saw EBITDA improve by 50% and its gross profit margin expand by 2.1 percentage points. Still, Billabong shares have fallen to two-year lows since the result, which fell below the $52-57m underlying EBITDA range guided in February.

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  • Radar Rating Unlock
  • Market Cap ($m)* 200**
  • Dividend Yield (%)* 0
  • NET DEBT ($M)
  • * Data as of 27 June 2018

Latest Research Summary

BILLABONG INTERNATIONAL: NEW STOCK UPDATES - JUNE 2018
27 Jun, 2018

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Previous Research

Research Date Radar Rating  
BILLABONG INTERNATIONAL: NEW STOCK UPDATES - JUNE 2018 27 Jun, 2018 19360394 View Research
BILLABONG INTERNATIONAL: RESEARCH TIP UPDATES - DECEMBER 2017 07 Dec, 2017 469afaae View Research
BILLABONG INTERNATIONAL: RESEARCH TIP - OCTOBER 2017 04 Oct, 2017 5418d263 View Research