The slow death march of the retailers continue, with Billabong (BBG) added alongside JB Hi-Fi today, announcing an estimated $20-25 million or approx. 25% drop in earnings (before interest and tax) for the six months ending December 2011, compared to the same period in 2010.
The clothes manufacturer and retailer noted that this estimate is heavily dependent on the performance of Christmas sales, and has been adversely affected by the strong Aussie dollar against the USD and Euro. It was not able to give guidance for the full year (to June 2012).
Worryingly, it added a note this morning that a “strategic capital structure review” is underway. This is usually code for a large capital raising that is surely to dilute existing shareholdings.
BBG has been in a structural downtrend all year, starting at $8 per share, now just below $4 a share, possibly heading to its year low of $3 or less on this poor news.
Who’s next? Harvey Norman? Myer has announced store closures this morning as well. Will followup and watch the crucial Christmas period closely.
Update: BBG has dropped 18% on the open, currently at $2.93 a share
Update2: BBG has dropped 32% to $2.47 a share.