Famous surf brand Billabong is in some serious trouble.
In an attempt to eliminate the middleman and increase profit, Billabong opened 500 of their own retail shops worldwide. The next genius idea came when they moved to buyout large U.S retailers such as Becker Surf. Now they’re in big time debt.
The company was forced in late 2011 to tell the Australia Stock Exchange and go public with the bad news.
Back in 2010 Billabong shares were trading at $12. Gordon Merchant is the founder of Billabong and in February 2010 he laughed off a takeover offer of $3.30 a share. This week, some four months later, Billabong shares sit at 0.96 cents.
Merchant now regrets the decision now, saying at the time he acted as a shareholder rather than a director.
The 2012 takeover came from TPG Capital and was 10% higher than their previous offer, totalling $841m Australian dollars.
The effects of the collapse have been felt in the surfing world as well. Billabong was no longer able to sponsor the Jeffery Bay surfing competition at the ASP World Championship Tour. As a result, the 2012 tour is now down to 10 events after the drop out.
The 39-year-old company is experiencing the same collapse Quiksilver experienced a few years ago, and although Quiksilver recovered it doesn’t look like Billabong has the same rebound potential.