Billabong, an Australian surfwear maker, has seen stocks plunge recently after the company posted an annual loss that was considered tremendous, totaling three times more than its market value. The company’s loss for the full year was $773 million, towering over its $256 million market cap. With shares falling more than 15 percent before it struggled to recover slightly, the company may be nearing its end of fame.
Billabong had been one of the most popular and most well-known Australian retail brands, with its apparel even being popular in the U.S., particularly in Hawaii and California. The company has faced recent struggles, and no one has determined how it can get itself back up on the rebound. The company has written the value of its Billabong and Element brands down to zero, which means essentially, that they are worthless. They have seen sales fall 13.5 percent since last year.
CEO Launa Inman resigned and there had been confusion about her successor, which in turn, had only worsened the situation. It took more than a month for a replacement to be appointed. Billabong has appointed Neil Fiske, former leader of Eddie Bauer and Bath & Body Works. Billabong had said Scott Olivet, the former CEO of Oakley was to be appointed to the position, but he never had formally stepped into the role. Experts say the company needs a strong, focused leader to help it restore earnings and climb back out of its hole.
Inman’s departure was part of an agreement the company made with a consortium that was under the leadership of U.S. private equity firm Altamont Capital Partners. Another part of the deal involved Billabong selling of its Dakine brand and securing a short-term loan that continues through year end as help with the debt refinancing negotiations.
It has been reported the company is going through long-term debt refinancing. Reports indicate that the company is within weeks of reaching a final refinancing agreement. The company has already closed 93 of its stores with the intent to close more. Billabong is also cutting jobs to help reduce costs.
Billabong, founded in 1971, is primarily known as a surfwear clothing company but also produces skateboard merchandise and accessories. With headquarters in Burleigh Heads, Queensland, shares were down to .71 cents each at the close of the day on Friday. It announced late Thursday that it would accept a financing offer from Centerbridge Partners and Oaktree Capital that many consider a lifeline to keep the company afloat. The financial package is worth more than $500 million with the two buyout firms controlling a 34 percent stake in the company.