The parent of Irvine-based Billabong USA has unveiled a four-year turnaround plan.
Australia-based Billabong International Ltd. sells action sports-inspired clothes, shoes and accessories under its namesake brand and others including RVCA, Element, Honolua and VonZipper.
The company’s turnaround plan followed the arrival of Chief Executive Launa Inman, who replaced former chief executive Derek O’Neill in May.
Plans call for moves to simplify Billabong operations by cutting back on the numbers of styles the company markets and suppliers it uses. The moves are based on results of a study that showed less than half of current styles and suppliers account for the majority of company sales.
The turnaround effort also aims to revive the namesake Billabong brand with a new global brand manager and global brand management team. The company seeks sales boosts for its Element, RVCA and Dakine during the next several years.
Billabong’s retail and e-commerce businesses also are targeted for improvement, with the company continuing with plans to shutter 140 more stores by next June.
Billabong had 634 stores as of June 30, with 225 of those locations in its Americas region. The Americas is made up of the U.S., Canada and South America.
Billabong projects annual earnings before interest, taxes, depreciation and amortization of $104 million to $114.4 million through June 30, 2013
The company’s turnaround strategy follows a tough year, which saw Billabong sell watch and accessories business Nixon Inc. for $285 million. Proceeds were tagged for debt reduction.
Billabong now faces a possible takeover from Texas-based private equity firm TPG Capital LP, which offered $713.7 million for the company in July. That follows Billabong’s rejection of two offers from TPG, first for $825.3 million and later for $909.2 million.
Billabong recently reported financial results showing adjusted sales in its Americas region fell 8% in fiscal 2012 to $780.3 million, excluding the impact of exchange rates. The Americas region includes the U.S., Canada and South America.
Annual adjusted earnings before interest, taxes and depreciation for the region declined 29% to $62.1 million.
Billabong posted companywide adjusted sales of $1.6 billion, representing a 5% slide in constant currency.
The company reported an adjusted profit after taxes of $34.8 million, off 74% from a year earlier in constant currency.
—Kari Hamanaka
