Could Getting Women on Board Keep the Global Surf Category Afloat?
In posting a $974.7 million group revenue with a comparable revenue loss of 4.7% for FY2017, Billabong International Ltd attributed the weak retail sector and highly promotional marketplace in Australia as a contributor to the year’s performance.
Indeed, in Australia bricks-and-mortar comparable store sales were down 5.0%, versus a 4.1% loss for the entire Asia Pacific region. E-commerce sales were however highlighted as a major growth opportunity for the company, with 5.1% growth in e-commerce sales across APAC. In terms of e-commerce as a percentage of total sales, the channel is underdeveloped in APAC at 1.9%, versus 7.4% in the Americas and 4.0% in Europe.
Surf-themed apparel has suffered a well-documented struggle in the aftermath of the 2008 financial crisis as the category’s leading brands have suffered severe subsequent financial losses. The category has a heavy reliance on markets suffering from economic slowdown and low levels of consumer confidence, such as North America and Europe, which are additionally characterised by an eroding middle market for apparel due to fierce competition from fast fashion and affordable luxury brands.
Billabong collapsed in 2012, and was subject to protracted takeover negotiations. In the 2013 financial year, the company declared its Billabong brand essentially worthless, writing it down to zero from $252 million. The company returned to profit in FY2015 for the first time in four years; however lost $23.7 million after tax in 2016 and $77.1 million in 2017.
Pursuing a simplified portfolio, concentrating on its three core brands (Billabong, Element and RVCA), has worked reasonably well in terms of Billabong International’s turnaround; however the global macro external pressures on the company are significant. The sale of Tigerlily during FY2017, for instance, further reinforces the core brand priority, and additionally assists in positioning the company as a serious player within the women’s specialty category.
Women’s sports apparel is seeing substantial growth both in Australia and around the world. Since 2013, the category has grown 17% in Australia and 21% in the US. There is certainly potential for more performance sport NPDs for female surfers in Australia. The women’s surf market has gained in popularity, with the World Surf League investing significantly to create a more equal competitive platform for men and women. Surfer Steph Gilmore is thought to be the highest paid female athlete in Australia, and even reported to be the world’s biggest female surf earner.
As the sport gains a higher profile for female participants, it’s thus likely to fuel demand for women’s performance surf apparel. Already Billabong International has reported big gains and a standout year for the women’s segment for Billabong in the Americas and that the brand is the Australian Surf Industry’s and US Surf Industry’s Women’s Brand of the Year, so women’s performance surf apparel is certainly a segment to watch for the future.