The Billabong International Limited (ASX: BBG) share price plummeted as much as 21.4% today to a low of 55 cents, before recovering slightly to trade 17.1% lower at 58 cents. That compares to a mere 0.5% decline for the ALL ORDINARIES (Index: ^AXAO) (ASX: XAO).
So What: The group's share price collapsed following its Annual General Meeting on the Gold Coast this morning at which the company highlighted a number of challenges it is currently facing.
The surfwear retailer reported that a weak Australian dollar and weakness in the North American market had dented earnings. While most of Billabong's debt is also in US dollars, interest and principal repayments have also become more expensive, as have capital expenditures and project costs in the region.
At the same time, the company also reported that customers are waiting for deals rather than buying items at full-price. While it remains committed to price integrity and maintaining margins, that could also have an impact on sales in the near future.
All in all, Billabong believes these headwinds have impacted earnings before interest, tax, depreciation and amortisation (EBITDA) by around $2.5 million during the first four months of the year (compared to the prior year). Further weakness in the all-important Christmas period could really dent the company's first-half performance.
Now What: Billabong has been an extremely volatile performer for investors in recent years with the share price falling 16.5% in the last 12 months, and 89.9% over the last five years. Although the company is currently in the middle of implementing a turnaround plan, conditions don't look like improving for investors anytime soon.
