Billabong Posts A $860 Million Loss as Brand Deemed Worthless

Billabong store facade | Source: Reuters

SYDNEY, Australia — Billabong International Ltd., the Australian surfwear company whose shares fell by more than half over the past year, posted a loss more than three times its market value and said its core brand was worthless.

The loss was A$860 million ($776 million) in the year ended June, compared with a loss of A$276 million in the previous 12 months, the Gold Coast, Australia-based company said in a statement today. Billabong was expected to lose A$547 million, according to the average of four analyst estimates compiled by Bloomberg.

Losses in its European division meant the company’s business costs ran higher than its sales revenue, with the company losing A$1.9 million before interest, tax, depreciation and amortization. The company’s brands, worth A$614 million at the end of 2011, were worth A$90 million at the end of June and the Billabong brand itself is worthless, the company said.

The company has been experiencing “continued difficult trading conditions, particularly in Europe,” Michael Simotas, an analyst at Deutsche Bank AG in Sydney, wrote in a note to clients Aug. 7. In Billabong’s home market, “consumer sentiment continued to weaken and warm weather weighed on winter apparel sales,” he wrote.

The stock closed at 56.5 Australian cents in Sydney trading yesterday, extending its decline this year to 32 percent. The S&P/ASX 200 index has gained 10 percent.

By: David Fickling; Editors; Subramaniam Sharma, Edward Johnson