RVCA, Element Key to Plan For Saving Billabong
California brands Element and RVCA willbe crucial in turning around the ailing surf giant BillabongInternational Ltd., the brands' parent company, according to a study released Aug. 27 by thesprawling Australian boardsports company, which runs businesses ranging fromsurfwear to bricks-and-mortar stores and e-commerce across the world. Thecompany also announced a loss of 275.6 million Australian dollars for thefull fiscal year of 2012.
The Billabong study noted that Irvine, Calif.–based Element and CostaMesa, Calif.–based RVCA, along with Dakine,based in Hood River, Ore., held potential for expansion, which would help deliverBillabong from its financial woes.
In the study, Launa Inman, Billabong’s chief executive officer,set out a more than three-year plan that called for investing in increased marketingfor RVCA and investing in Dakine product development in 2013, as well asincreasing Element’s business in 2014. The plan also called for increasedinvestment for the company’s core brand, Billabong.
Analyst Greg Dring of Macquarie Securities in Australia wrote inan Aug. 28 research note that the study had done a good job in diagnosing thesurf giant’s problems. “While it appears to be a good sales document, there wassubstance in new CEO Inman’s assessment of the company’s weakness in retail andopportunities to improve the business,” Dring wrote.
Also in the plan, Billabong, in its 2013 fiscal year, will close 82 stores out of the company’s sprawling fleet of more than 634stores across the globe. Billabong also will invest more in building itse-commerce retail and develop its social-media presence to help market thebrands. The plan forecasts integrating the company's e-commerce retail into itschain of bricks-and-mortar stores. The multi-channel function of its retail will invite more consumers to Billabong’s stores, the study said. Billabongalso announced that it hired Colin Haggerty, a board director of TargetAustralia who has abackground in building new sales channels.
Billabong had appointed Inman, a former managing director ofTarget Australia, in May to turn the surf company around. Former Billabong chief Derek O’Neill was ousted from the company after Billabong reported inFebruary a more than 70 percent drop for its first-half-year earnings to AU$16million. American private-equity group TPGInternational LLC submitteda proposal last month to acquire all of the shares in Billabong for $1.45 pershare.—Andrew Asch
