GOLD COAST 25 May 2012. Billabong shares have dropped in price steadily since the Nixon shuffle temporarily made the Surf Fashion business look like it was in recovery. Readers will recall that Billabong sold off half of one of its subsidiaries to investors to bring in some cash to offset the trading slump. Nixon brand sale yields $276m for Billabong
The Billabong Board of Directors announced the sale to fend off interest from capital funds anxious to buy the business. Part of Billabong's defence was to sell almost half of Nixon to bring in cash and reduce the attraction of the whole to share raiders who often move in on crippled companies.
Since the sale of Nixon and the news that many new stores set up at great cost, would be closed, share trading volume in Billabong has been very low. Few buyers can be found for Billabong stock as disgruntled Mum and Dad investors and institutions have apparently given up hope that the stock will once again trade at $17.00.
Institutions like superannuation funds, that need quality stocks in their portfolios are not keen about Billabong as an investment as the market is still awaiting the release of trade figures or some news from the Billabong board.
Today the share price is less than $2.10 which is up on the crash low of $1.60 but way down from the slight recovery that flashed briefly when Nixon was partly sold. That sale is now complete and the cash looks good in the balance sheet.
CEO Derek O'Neill was sacked with a $2.4 million plus golden handshake when Billabong became unattractive as profits fell and debt rose. After a 20 year career at the helm of all operations at Billabong, the Founder and Billabong Director Gordon Merchant, recently took credit for telling Derek O'Neill "It's time to go"
See Melbourne Age Billabong founder sacked former CEO
Mr Ted Kunkel (Chairman, Non Exec. Director) must be feeling the heat from the remaining shareholders who will not be happy with the second slump in the share price for 2012.
Founder and major shareholder, Gordon Merchant recently gave limited support to Kunkel when speculation rose that he too might be held to account for the huge loss in the capital value of Billabong, the rise in debt during the Global Financial Crisis and the vast amount of clothing stock the company holds.
This inventory has to be sold off from the 100's of stores that closed or will close. The new CEO is overseeing sackings and surf fashion store closures around the World.
Investors and brokers are waiting for the Billabong profit forecasts for early 2012. Until the ASX receives the good ( or bad ) news, the value of the Billabong brand and the company itself declines with the fall in share price.
The new CEO, Launa Inman, is a retailer who understands how to sell. One internationally significant segment of Billabong's marketing will have to be sorted out.
Becker Surf in the USA is a Billabong owned retailer with a vast affiliate network monitored through one of the World's largest affiliate marketers, Commission Junction. Telegraph Media through group online retailer, www.Maaket.com had first hand experience of marketing "issues" at Billabong.
Becker Surf creates Billabong banners for affiliates who work with them online to sell Billabong clothing. The problem encountered was that Billabong's legal team issued threatening letters warning of court action for "misuse of Billabong trademarks" !
It is difficult to understand how one arm of Billabong can send out Billabong logos, banners, text links and images of products to www.Maaket.com to sell Billabong apparel while the legal people employed by Billabong on two occasions threatened court action against the hapless affiliates who used the Billabong advertising material created for and issued to them by another part of Billabong.
Billabong's Communications Manager John Mossop failed to respond to requests from Telegraph Media to explain management reasons for engaging in this allegedly aggressive treatment towards their approved authorized marketers.
The ASX on behalf of investors and the public is waiting for news of the gains made from Billabong's management restructure.
Existing investors will be keen to know if they can expect dividends while simultaneously clinging to hope that the value of their Billabong shares will recover.
To follow the price of Billabong shares and trading volumes go to the ASX page here http://asx.com.au/ and enter "BBG" in Price Search
Update 30 May 2012.
On very low turnover, due to low demand from buyers, the Billabong ( BBG ) share price has continued to fall. Investors have pushed the Billabong share price below $2.00 since the slump that led to the sacking of Derek O'Neill and suggestions that Ted Kunkel ought to be held accountable for overseeing the slow death of a brand that was once proudly worn on millions of T shirts and boardies. Last trades in the morning session were at $1.97.
No news has been released by management at Billabong since the appointment of a new CEO two weeks ago. Since then, a further 10 cents, or around 2.5% has been wiped off the value of the Billabong Group. This small % decrease equates to millions of dollars of shareholder equity lost.
Source : http://www.international.to/
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