B$Z: Billabong's 2013 Annual General Meeting Details
Billabong's Mantra Under New CEO: Fewer, Bigger,
Meeting Summary sourced from SportsOneSource
At its annual meeting, Billabong’s new CEO Neil Fiske outlined a seven-point turnaround plan, which includes rebuilding the company’s global brands and sorting emerging brands, finetuning merchandising strategies with fewer better styles, and integrating marketing strategies for each region.
Fiske, who is credited with turning around Eddie Bauer, said Bilabong had become “ enormously complex and diversified.”
"We have been trying to do too many things – and none of them particularly well," said Fiske. "Building global brands takes one skill set. Running regional multi-brand retail is something totally different. And being a pure play multi-brand e-commerce business is another thing altogether. Then multiply that complexity by a regionalized organization structure with independent decision making and different operating infrastructures. As complexity grew, we lost focus. We confused the organization. As someone said to me on my first global tour of the company: “We need clarity. Are we a retail company with brands… or are we brands with retail?”
He noted that the Billabong brand is still the number one brand in specialty surf shops in both Australia and the United States. It has over 90 percent awareness and high regard in the target demographic.
"I’m only 12 weeks into this role," said Fiske, picture at left. "I’ve had the chance to spend time in our operations in Europe, the Americas and Australia. I’ve spent time in our stores and talked to our core customers, key accounts, and sales reps. I’ve looked at the consumer research. At the financials. At where we win and where we lose. And I can tell you this – I am more convinced than ever of the upside ahead of us and the power of our brands.
"It’s exciting to be here and see the potential right in front of us," he continued. "It’s tangible. It’s real. But to get it, we’re going to have to make bold moves. Get back to the core. Chop the unprofitable branches off the tree. Focus on what we are best at doing. Create a brand renaissance."
A new mantra
Fiske said the companies new mantra is "fewer, bigger, better businesses, fewer bigger better brands and fewer bigger better styles.”
“This philosophy will pervade everything we do,” he said.
He noted that Billabong has several brands but "we treat them all pretty much the same. Each brand, for example, gets a comparable level of marketing – regardless of where it is in its lifecycle or growth potential. RVCA is showing tremendous growth. But we’re giving it the same level of marketing as more mature brands – instead of putting our foot on the gas pedal and investing to accelerate growth and market share."
As a result, the company has sorted the portfolio into two groups – “the big three” of Billabong, Element, and RVCA and smaller 'emerging brands.'
The big three and the rest
With the appropriate focus and resourcing, Fiske said the three brands have the potential to grow consistently and deliver strong profitability. He said Billabong remains an iconic surfing brand that still owns the authentic surf lifestyle; Element is the biggest authentic skate apparel brand in the world and connects Billabong to the street culture; and RVCA is a totally unique blend of multi-sport, culture, and art.
Fiske said some brands in the company's emerging brand portfolio, such as Von Zipper, have the potential to become much bigger lifestyle brands.
"We will keep the ones that have growth and category leadership potential and evaluate our options for the others," he said. "You will see us tailor specific strategies to each brand based on their size, potential, life cycle, and role in the portfolio."
Fiske said Billabong Founder Gordon Merchant for Billabong, Element Founder Johnny Schillereff, Von Zipper Founder Greg Tomlinson and RVCA Founder Pat Tenore are being empowered to fostering creative and cultural environments needed to give each brand a distinctive DNA and vivid personality.
"Maximizing the power and creativity of these founders is fundamental to our brand renaissance," Fiske said
Other parts of the turnaround include building new channels to market and significantly increase direct-to-consumer sales to 30 percent of total sales within the next five years. He also flagged further restructuring of Billabongs supply chain, moving to fewer, bigger suppliers and gradually diversifying out of China.
Billabong needs to realign the organisation to the new strategy by developing a global brand structure, better merchandising, design and marketing teams and build global scale and capability in finance, supply chain, IT, and direct to consumer platforms.
Fiske finally said Billabong needed to look for further cost reductions to improve profits and fund a marketing war chest.
Problems in the Americas
Chairman Ian Pollard said sales so far this financial year were "steady or slightly improving" in most markets except the Americas, which had been hit by problems at US retailer West 49, management disruption and "its customer confidence as we negotiated our way through the difficult period in mid-2013."
He added, "Whilst the
November result for the Americas was much better, the region was $9 million down
in EBITDA for the first four months before significant items compared to the
prior year. Collectively the rest of the group is ahead of the prior year on a
comparable basis as we enter our most important trading period. I am confident
though, that having withstood challenges few other brands could have, ours will
flourish once they receive our full attention and appropriate investment and
will in due course provide us a more appropriate return on your investment than
More details from the annual meeting can be found here.