California Apparel News

In a little more than a month after it named a new chief executive officer, the beleaguered parent company of Irvine, Calif.–based Billabong announced that it has sold the Canadian chain of stores West 49 Inc. to YM Inc., which is headquartered in Toronto.

On Nov. 4, Billabong International Ltd. reported that YM is purchasing the West 49 chain for $8.5 million to $10.5 million. YM will retain six Billabong stores and two boutiques for Billabong’s Element brand in Canada. The statement also reported that the two companies will enter into a $32.4 million non-exclusive wholesale agreement for the next two years.

YM owns popular Canadian retailers Bluenotes, Siblings, Sirens, Stitches, Suzy’s Inc. and Urban Planet. Billabong acquired the 138 locations of the West 49 chain for $94.5 million in July 2010. Billabong’s initial purchase of West 49 received criticism from some retail analysts because the retailer showed signs of decline during the Great Recession.Billabong’s statement said there are currently 92 West 49 stores.

Neil Fiske, the Billabong chief executive officer who joined the company in September, said that “the sale of West 49 is part of our broader strategy of simplifying our business and focusing on the core of what we do best, which is building strong global brands.”

In the past 18 months, Billabong, one of the surfing world’s most popular brands, has been embroiled in a struggle for control of the Australia-headquartered company. On Nov. 4, Billabong also announced that a $300 million portion of a $360 million six-year senior secured term loan was funded on Nov. 1. Proceeds from the $300 million tranche repaid a $294 million bridge loan facility from Altamont Capital Partners, which is headquartered in Palo Alto, Calif. Altamont was one of the companies vying to control Billabong. With the repayment of the loan, Altamont gave up its two seats on Billabong’s board.

Jeff Harbaugh, an independent analyst of the action-sports industry, noted that Billabong still has work to do to restore its former position as one of the most successful companies in the action-sports market.

“I’m happy to see it moving forward,” he wrote in a Nov. 4 column on his website, Jeff Harbaugh’s Market Watch. “They can restructure and cut expenses till the cows come home, but customers still have to like the brands.”