Attention is back on the turnaround of Irvine-based Billabong USA and its Australian parent in the latest remarks from the action sports company’s board chairman and new chief executive.
Investors sent the company's shares up about 18% in Australia on Tuesday to a market value of $167.17 million on the company update.
The renewed focus on the turnaround follows a drawn-out sale process in which Billabong International received multiple bids with due diligence processes that put various tactics to improve the business on hold.
The company’s annual meeting was held on Tuesday in Australia, where Billabong International is traded on the Australian Securities Exchange.
Chair Ian Pollard recapped the events of the past year in his address to shareholders, characterizing the business since the start of the fiscal year in July as “steady or improving slightly in most markets.” The exception is the Americas business, Pollard went on to say, which has been hampered by high executive turnover, waning consumer confidence and weak business for the West 49 chain that the company sold in November.
Newly appointed Billabong Chief Executive Neil Fiske went over a multi-phase turnaround strategy in his address that focuses on strengthening core brands, cutting product lines by at least 25%, increased marketing and tightening the supply chain through faster inventory turns and diversification outside of China.
Fiske called out Billabong along with Element and RVCA, both based in Costa Mesa, as the company’s three largest brands. He went on to clearly state each of those brand’s place in the market with Billabong positioned as a surf label, Element being the company’s skate brand and RVCA functioning as the multi-blended line inspired by various sports, culture and art.
“RVCA is showing tremendous growth,” Fiske said in his address. “But we're giving it the same level of marketing as more mature brands—instead of putting our foot on the gas pedal and investing to accelerate growth and market share.”
The rest of the company’s brand portfolio will roll into the emerging brands category, which Fiske described as lines having the “potential to become much bigger lifestyle brands.” Examples of this include Irvine-based VonZipper USA, Fiske said.
“We will keep the ones that have growth and category leadership potential and evaluate our options for the others,” Fiske said of the company’s plan for brands that fall outside of that category.
Billabong is now finalizing its strategy and is expected to release a more detailed plan at the start of the year.