Ever since Billabong’s horrid December 2011 financial report of a drop of 44% for an all-time record low on December 19th, the surf brand has been under a microscope among financial advisors as to what’s next for the troubled action sports company. After the December report, Goldman Sachs announced a structure review, with Billabong stating “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.”
Billabong’s low report at the time was due to softer than expected sales during the holiday season—something many brands, especially in action sports, have been dealing with in today’s harsh economic climate.
This led to speculation that mega brands such as VF Corp or Nike might step in, but as of today, according to The Australian Financial Review, it looks like private equity firms are moving in for the potential kill at a price quote of $766 million.
According to the report, the offer was presented to Ted Kunkel, Billabong chairman, by TPG, the equity company that owns Ducati and J. Crew, among others.
Stay tuned for more as news unfolds, plus latest trends on Billabong’s change in popularity among youth culture in Label Networks’ upcoming Spring Youth Culture Study 2012.
Meanwhile, VF Corp, owners of Vans, The North Face, Lee, Wrangler, 7 for All Mankind, among others, and the newly acquired Timberland, announced their Q4 revenues at a record $2.9 billion—which includes $549 million from the Timberland acquisition. The report indicates that Timberland, which was apparently a good buy, should account for $1.7 billion in revenues in 2012 (thanks in large part to the brand’s strength in Europe).
The strongest growth areas yet again for VF Corp come from the outdoor and action sports segments of the company, in particular, The North Face’s and Van’s direct-to-consumer business, which was up for the 4th quarter 20%, and 21%, respectively.
What’s still taking a hit, as we’ve seen with denim brands across the board due to higher production costs, are VF’s Jeanswear category, with revenue increases of just 3%.
“In 2012, our Outdoor & Action Sports business should exceed 50% of total revenues – a new milestone for VF, achieved by a combination of consistent, outstanding organic growth and a track record of successful acquisitions,” said Wiseman. “A big focus for us this year will be on building the foundation to support Timberland’s future growth and to strengthen its profitability. We look forward to a year of healthy growth across our coalitions and to delivering another year of record revenues and earnings to our shareholders.”