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Sales slowdown due to global recession, Billabong
19 Dec '11
5 min read
While the Group's trading results remain heavily subject to performance across the balance of the critical December trading period, the Company anticipates reported EBITDA for the six months ending 31 December 2011 to be in the range of $70 million to $75 million (compared to $94.6 million in the pcp).
On a constant currency basis, the Company anticipates this EBITDA range would be approximately $4 million higher, with the range on an 'as reported' basis being adversely impacted in particular by the stronger AUD against the USD and Euro for the six month period ending 31 December 2011 compared to the pcp.
Given the poor macroeconomic and trading environment, the Company is not able to provide guidance for the full 2011-12 financial year, however, strong underlying EBITDA growth compared to the pcp in constant currency terms for the full year is not expected.
While the Group remains focused on reducing working capital and maximising cash flow from operating activities, the poor macroeconomic and trading environment is hampering the Group's ability to clear excess inventory.
In light of the shift in retail consumer and wholesale customer spending patterns, and while significant costs have already been taken out of the business over recent years, the Company is undertaking a further operational review of the business to ensure additional appropriate reductions are made to overheads in the current financial year and into the 2012-13 financial year.
In addition, a strategic capital structure review is under way with the Company's advisor, Goldman Sachs. This review includes an assessment of all potential alternatives to strengthen the Company's capital structure in light of the existing operating environment and the risk for further deterioration.
The review encompasses all of the Company's balance sheet alternatives. It would be premature to speculate on the most likely outcome of this review and, while nothing has been ruled out, raising equity is not the preferred path at this time as the Company is reviewing other options.
Despite the extremely challenging external trading environment, the Company continues to believe in the fundamental mid to longer term potential of its previously-stated strategy, in particular to enhance its direct-to-consumer business model, grow the vertical margin contribution from company owned brands in acquired retail stores and continue the rapid expansion of its online businesses.
The Company will release its half year results on 17 February 2012.
On a constant currency basis, the Company anticipates this EBITDA range would be approximately $4 million higher, with the range on an 'as reported' basis being adversely impacted in particular by the stronger AUD against the USD and Euro for the six month period ending 31 December 2011 compared to the pcp.
Given the poor macroeconomic and trading environment, the Company is not able to provide guidance for the full 2011-12 financial year, however, strong underlying EBITDA growth compared to the pcp in constant currency terms for the full year is not expected.
While the Group remains focused on reducing working capital and maximising cash flow from operating activities, the poor macroeconomic and trading environment is hampering the Group's ability to clear excess inventory.
In light of the shift in retail consumer and wholesale customer spending patterns, and while significant costs have already been taken out of the business over recent years, the Company is undertaking a further operational review of the business to ensure additional appropriate reductions are made to overheads in the current financial year and into the 2012-13 financial year.
In addition, a strategic capital structure review is under way with the Company's advisor, Goldman Sachs. This review includes an assessment of all potential alternatives to strengthen the Company's capital structure in light of the existing operating environment and the risk for further deterioration.
The review encompasses all of the Company's balance sheet alternatives. It would be premature to speculate on the most likely outcome of this review and, while nothing has been ruled out, raising equity is not the preferred path at this time as the Company is reviewing other options.
Despite the extremely challenging external trading environment, the Company continues to believe in the fundamental mid to longer term potential of its previously-stated strategy, in particular to enhance its direct-to-consumer business model, grow the vertical margin contribution from company owned brands in acquired retail stores and continue the rapid expansion of its online businesses.
The Company will release its half year results on 17 February 2012.
Billabong International
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