by lexi & olivia

australia-based wholesaler & retailer

brands – billabong, element, RVCA, etc.

products are licensed & distributed in 100+ countries

owns & operates 562 retail stores

BILLABONG

operates in 4 geographical categories

americas contributing 47.4% of their revenue australasia contributing 35.1% of their revenue

europe contributing 17.3% of their revenue rest of the world contributing 0.2% of their revenue

BILLABONG

MARKET ANALYSIS

market – australian apparel retail industry recovering from a decline in 2011 a low-moderate growth is projected through 2018 compound annual growth rate (CAGR) = 2.3%

GRAPHS!

AUSTRALIA

1st european settlement – sydney (1788)

many of the first settlers were convicts

gold brought more free people during the 1850s

today, 90% of population is of european descent & less than 3% descended from indigenous aboriginal population

POLITICS UK monarch formal head of state

& is represented by AU governor-general

have a senate & house of representatives

political risk index – 9.5

political stability – 9.5

CULTURAL ETIQUETTE culturally relaxed (for the most part)

always be punctual & make appointments

keep communication direct & brief

take rough & rugged “outback” mentality seriously

don’t like those who brag & show off

keep work & pleasure separate

FOREIGN EXCHANGE exchange rate the rate at which one currency is converted into another foreign exchange market a market at which one currency is converted into another foreign exchange risk the risk that changes in exchange rates will hurt the profitability of a business deal

THE CASE 80% of billabong sales are outside of australia

network of 10k outlets in 100+ countries

largest foreign market = USA

50% of company’s $1.7B annual sales

fortunes closely linked to the value of the australian vs US dollar

THE CASE

as the value of the australian dollar decreases against the american dollar, products become less

expensive in the US, which increases sales

as the value of the australian dollar increases against the american dollar, prices in the US are

raised which negatively impacts sales

THE CASE every $0.01 movement in the US/australian dollar =

0.6% change in profit for billabong

2008 – global financial crisis was beneficial for billabong

2009 – australian dollar strengthened

which resulted in a profit loss for billabong

SWOT large product base &

multi-channel operations

significant footprint in major markets

expansion through strategic acquisitions

revenue decline affecting the company’s profitability & cash position

restructuring initiatives likely to help the company in its top-line growth

growth in global online retail sector

likely to help the company in generating incremental revenues

weak economic conditions in europe intense competition may affect market share

weaknesses

threats

strengths

opportunities

RECOMMENDATIONS?

RECOMMENDATIONS

start focusing more on markets in asia-pacific & europe

RECOMMENDATIONS

continue implementing the restructuring

THANK YOU

SOURCES "Apparel Retail Industry Profile: Australia." Apparel Retail Industry Profile: Australia (2014): 1-31. Business

Source Complete. Web. 12 Oct. 2014. http://web.a.ebscohost.com/bsi/pdfviewer/pdfviewer?sid=f56b4a19-5839-4f9a-aa89-980cb9fd9840%40sessionmgr4001&vid=1&hid=4104 "Billabong International Ltd. SWOT Analysis." Billabong International, Ltd. SWOT Analysis (2014): 1-7.

Business Source Complete. Web. 12 Oct. 2014. http://web.b.ebscohost.com/bsi/pdfviewer/pdfviewer?sid=3809d3a8-88db-4f5f-b1c9-ddf0fb6bb8ab%40sessionmgr114&vid=7&hid=106  "Billabong International Ltd (AUS: BBG)." Mergent Online. N.p., n.d. Web. 13 Oct. 2014. http://www.mergentonline.com/companydetail.php?compnumber=103539 "Country Watch - Australia." Country Watch. N.p., n.d. Web. 13 Oct. 2014 http://www.countrywatch.com/cw_country.aspx?vcountry=9 "The Foreign Exchange Market." YouTube. YouTube, 9 Dec. 2011. Web. 13 Oct. 2014 https://www.youtube.com/watch?v=-qvrRRTBYAk. "Investors Home." Billabong Biz: Behind the Brand. N.p., n.d. Web. 13 Oct. 2014. http://www.billabongbiz.com/phoenix.zhtml?c=154279&p=irol-irhome   Terry-Armstrong N., “Billabong: A Company In Financial Crisis.” Busidate [serial online]. July 2014;22(3):4-6.

Available from: Business Source Complete, Ipswich, MA. Accessed October 13, 2014. http://web.a.ebscohost.com/bsi/pdfviewer/pdfviewer?sid=0e645f62-defb-4a5a-ab7c-70b860eb3738%40sessionmgr4002&vid=1&hid=4104