Billabong shares hit an all time low
Billabong shares fell to a record low of $0.50 yesterday. 'Record lows' have been a recurring feat for the company as its value inexorably heads south.
The share price drop is attributed to a $77.1 million loss for the Year to June - which clocks in at three times the $23.7 million loss it reported last year..
The latest loss is partially explained by Billabong slashing the value of goodwill and brands including Von Zipper, Kustom, Xcel and RVCA by $106 million. The writedowns were partially offset by a $48 million profit made on the sale of Tigerlily.
However, it's not all bad news according to Billabong chief Neil Fiske who says the only way is up. “This result marks a turning point for the company, and one on which we can build,” he said in a statement to the stock market.
Fiske said Billabong had a growing “followership” on social media, which bodes well for the future. “The key to our ongoing success is the relevance of our brands,” he said. “We continue to strengthen the connection with our customers, with global social media followership up 42 per cent year-on-year to almost 37 million.”
As Fiske hinges Billabong's recovery on social media traffic, it's worth taking a closer look at Billabong's share price.
A cursory scan of Billabong's share history show the value bottomed out in June 2013. These were the dark days of the surf industry collapse and Billabong shares, which were once worth $16, slumped to $0.13.
For two years they plateaued until in late 2015, with the shares worth $0.50, the Billabong board issued a 5 for 1 share consolidation and the share price rose to $2.50 overnight.
Chairman Ian Pollard said the share consolidation was needed to bring the number of shares issued by Billabong to "a more appropriate for the size the company". It also kept the ASX regulators at bay.
However, rather than instilling market confidence, Billabong shares continued the same south bound progress. And simple mathematics underscores a cold reality: yesterday's value of $0.50 actually represents just $0.10 in pre-consolidation terms.
Whichever way that number is chopped, diced, or spun, it categorically represents the lowest Billabong shares have ever traded.
It's a mug's game predicting how this might affect the surfing world. In the almost-decade since the GFC hit, Billabong's health has slid yet it's managed to weather shareholder revolt, the jailing of past CEO Matthew Perrin, and multiple profit downgrades, yet all the while it's kept a hand in professional surfing.
In 2009 and 2011 Billabong sponsored four CT contests. They currently sponsor two, and they've been ably assisted by the WSL who now assume all costs aside from billboard sposnsorship - currently running at $1 million a contest.
Billabong also had an extensive roster chop in 2014, not long after the 2013 low, yet they've retained a coterie of sponsored riders.
Comments
I'm just on my way down the shops to buy a Von Zipper shirt.
Said no one ever.
Mr Fiske is an ideal face for the brand: middle-aged, bespectacled, just discovered Facebook.
Synergies etc
Him wearing that shirt negates the $30M per annum they spend on advertising and sponsorship attempting to portray Billabong as cool.
"It's a mug's game predicting how this might affect the surfing world" . . . Just to clarify . . . This isn't a part of a lot of peoples "surfing world".
Social media traffic up, nice. To quote an old darkroom nudist surf photographer "A fistfull of phone numbers and no root."
Do Billabong executives wear Billabong clothing or suits to work?
Built-It-Wrong. Every. Time.
The optimism is shiny though. Short stock
Occasts bumped up social media numbers a bit as have FB like click bots.
In the 1990's they would have been quoting huge increases in actual sales of product by actual people with something called money.
yep frog, increase in $ by increased sales. Simple. That's how companies thrive or survive.
But "growing “followership” on social media, which bodes well for the future "? Hmmm, doubt it. He would have been brutally savaged at analyst briefings if he bought that crap line out (I doubt he would've at an analyst briefing, that was a broader media line).
Let's face it, a lot of traditional business models are stuffed and all but dead despite high social media connectivity, which makes me wonder which nuffy told him to try to sell that line.
The only thing I need is a decent wetsuit and good board shorts which I can get at the local DFO that has 60% off retail all year round.
Well said, but you forgot a bar of wax.
Lowest share price ever. The inevitable result of a surfing company trying to become a fashion company.
You'd think the execs would give up on this business model. It's not like outdoor adventure clothing companies haven't routinely crumbled by ignoring top quality technical gear in favour of $50 T Shirt with a stinking great advertising board on the chest.
if they are not a rag trade company selling t-shirts, then where do you make your money with surfing? making boards is about the best way not to make money. wax, leggies and fins? wetties? can you make money on those? i guess o'neil made a shitload and FCS, are they wealthy?
Surfers still need wetties, leggies, fins, boards etc. The fact FCS has killed it tends to indicate surfers are happy to fork out cash for quality surfing products that you use rather than generic crap you wear to the pub.
Same with ski gear. The brands that are still around make quality gear year in year out. Fashion is fickle, quality outdoor product still sells. Like Billabong, The Mad Hueys are screwed when the kids no longer think it's cool.
Mad Hueys 100% doomed
Absolutely. The surf industry is littered with corpses of the cheeky little upstarts sticking it to BIG SURF by playing the anti-establishment card.
It can only last so long. As the Mad Huey product hits saturation point, the kids will no longer think it's cool and move on to the next new thing. If I was their financial advisor, I'd tell them to enjoy it while it lasts and FFS don't go into debt trying to expand a brand with a limited shelf life.
Yes I wonder how Deus are doing as they do have some good gear, in my opinion, and often I buy it but I wouldn't touch their bikes (way too expensive) or boards (dogs with a collar called a legrope). From the outside, they seem to have a certain niche which is always bubbling along. They are pretty cool whereas I always thought Billabong was pretty bogan.
BBG shares are up 23% today (96c) on the news that Boardriders Inc (the new corporate name for the Quiksilver group) have made an offer to acquire the whole business.
http://www.asx.com.au/asxpdf/20171201/pdf/43pt0njyt32q3v.pdf
Wow, thats almost a quarter rise. Interested to see the out come.
Nothing like a good 'ol takeover to rip the faces off the shorts..