Shares in surfwear giant Billabong International have plunged 20.5% in two days after the company revealed sales in the company’s key US market plunged in November and slashed its profit forecast.
Shares in surfwear giant Billabong International have plunged 20.5% in two days after the company revealed sales in the company’s key US market plunged in November and slashed its profit forecast.
The share slide as particularly brutal for company founder Gordon Merchant, who retains a large stake in Billabong. In just two days the value of his stake has plunged by $64 million to $248.7 million.
Billabong chief executive Derek O’Neill says wholesale and retail volumes have suffered in the company’s US business as the world’s largest economy goes into reverse. The US accounts for around 20% of the group’s total sales.
“We have a football counter in our New York store at Times Square. Just the traffic in the month of November was down 29%… with a similar type decline through the till,” he told analysts during a conference call.
To make matters worse, the dramatic weakening of currencies, including the Canadian dollar versus the US dollar and the British pound versus the euro, is also weighing on the company’s regional results.
Billabong has now revised its earnings per share guidance for 2008-09 down from 12% to 16% to between 6% and 10%.
O’Neill has vowed not to follow rivals in the US which are discounting deeply to try and keep to try spark sales.
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