Billabong will have selling pressure
http://www.thecouriermail.news.com.au/common/story_page/0,5936,4381739%5E3122,00.html --------------------------------------------------------------------- Surf's up for BillabongJames McCullough 25may02 --------------------------------------------------------------------- THE Gold Coast's reluctant wunderkind, Matthew Perrin, stood up yesterday and revealed to a sea of dark suits the secrets of Billabong's success. --------------------------------------------------------------------- "The biggest challenge is staffing and keeping your brand young, talented and vibrant," Perrin told about 500 members of the Australian Institute of Company Directors in Brisbane. --------------------------------------------------------------------- Billabong, the local success story which receives 75 per cent of its revenue from offshore and is the third largest surfwear company in the world, insists on local management and young designers. --------------------------------------------------------------------- "I am 30 and the average age in our design department is about 22," the Billabong chief, dressed casually in blue open neck shirt and slacks, said. --------------------------------------------------------------------- "There are plenty of people (on staff) with earrings in places that I am certainly not going to reveal here today," he said. --------------------------------------------------------------------- The formula and shrewd global branding has seen the Billabong share price leap nearly five times since it floated in August 2000 and ensure three million Billabong products were sold in Australia last year. --------------------------------------------------------------------- And, coincidentally, the company just happened to be responsible this week for catapulting three new Queenslanders into the annual bible of corporate wealth – the BRW Rich 200 list. --------------------------------------------------------------------- Chairman Gary Pemberton, the "Mr Blue Chip" of corporate Australia, Perrin and wife Nicole joined Billabong founder Gordon Merchant on the controversial list. --------------------------------------------------------------------- Merchant, the 58-year-old surfer who established Billabong in 1973 after sewing board shorts on his kitchen table at Burleigh Heads, is now worth $520 million – from $220 million last year – making him Queensland's richest person. --------------------------------------------------------------------- In between surfing around the globe out front of several of his newly acquired houses in Spain and other locations, Merchant still manages to pop in and check operations are proceeding smoothly. --------------------------------------------------------------------- Perrin's key to success is mirrored in the company's strong well-managed global brand which, unlike many others in the competitive world of retail, spans the youth market through to Generation Xers and baby boomers. --------------------------------------------------------------------- It's not uncommon to see a 50-year-old waddling down to the surf in a Billabong wetsuit or a 10-year-old decked out in a pair of Billabong boardies. --------------------------------------------------------------------- "Our marketing tool is everyone from the elite Australian athlete through to the 12-year-old kid standing on a beach," Perrin said. --------------------------------------------------------------------- "We probably get the best results from having the local surfer at every beach in the country (wear our product)." --------------------------------------------------------------------- Perrin, together with Merchant and Pemberton, the former Qantas chairman and Brambles chief, masterminded the company's successful listing. --------------------------------------------------------------------- The public float of 120.4 million shares – or 60 per cent – of Australia's first listed surf-clothing company was rushed by investors. --------------------------------------------------------------------- The company hit the bourse with an issue price of $2.30 and climbed to a high of $9.90 in March this year. --------------------------------------------------------------------- A subsequent slump saw it retreat to a low of $7.67 in early May but the stock has since been on the rebound, yesterday closing up 11¢ on its high for the day of $8.98 on volume of 344,000 shares. --------------------------------------------------------------------- Analysts have placed a value of between $12.50 and $13.50 on the stock on a discounted cash flow basis. --------------------------------------------------------------------- Ord Minnett, which floated the company and commands the bulk of the company's volume, is not surprisingly bullish on the outlook. --------------------------------------------------------------------- "It is a buy," analyst Russell Wright said yesterday. --------------------------------------------------------------------- The company is today capitalised on the ASX at $1.7 billion which places it in the top 75 public companies in the country. --------------------------------------------------------------------- Providing additional muscle, Foster's Brewing chief Ted Kunkel joined the Billabong board in February last year. --------------------------------------------------------------------- The company's products are now sold in more than 60 countries throughout the world and its revenues have leapt 400 per cent over the past three years while its profits have increased 500 per cent over the same period. ---------------------------------------------------------------------Perrin is remarkably nonchalant about his new-found wealth and that of his mates. --------------------------------------------------------------------- For instance, his brother Scott, an original investor, zips around the coast in a 600 CL Mercedes while maintaining a picturesque waterfront home. --------------------------------------------------------------------- Elaborating on Merchant's string of homes around the globe, Perrin shrugs: "Good luck to him." --------------------------------------------------------------------- After the stock's debut, Perrin's holding of 8.7 per cent was worth a cool $120 million, when the share price was $6.75. Today his reduced holding of about 7 per cent is worth about $177 million on yesterday's closing price but Perrin doesn't dwell on his riches. --------------------------------------------------------------------- "It's not something I really think about," he said after the company released its maiden full-year scorecard since it listed. --------------------------------------------------------------------- "All that type of thing could disappear pretty quickly if you don't produce the results and you lose your credibility. --------------------------------------------------------------------- "Nothing much has changed," he said. "I'm still the same clown my friends went to school with." --------------------------------------------------------------------- Perrin, a lawyer and father of two, was appointed chief executive in 1999 – only 10 years after graduating as dux at The Southport School. --------------------------------------------------------------------- He describes himself as a "mad rugby union man who has too many racehorses". --------------------------------------------------------------------- A Gold Coast native, he had a natural instinct for the company's culture. --------------------------------------------------------------------- "There's not a strong corporate culture within Billabong," Perrin says. "There never has been." --------------------------------------------------------------------- If the surf is up, many of the company's young staff will not wander in to work until lunchtime – and the boss won't blink. --------------------------------------------------------------------- That flexibility is seen as crucial to maintaining a youthful, hardcore presence in the marketplace. --------------------------------------------------------------------- "One of the staff had a bet with another about how long they could both grow their hair without cutting it. Three years later when they wander into the accounts department the reaction is quite interesting," he said yesterday. --------------------------------------------------------------------- "That's part of our business. You need those guys because they're the ones who are out there living the lifestyle, designing products for themselves and marketing to themselves," Perrin said. --------------------------------------------------------------------- Billabong's bourse success also preceded a boom in surfwear companies. --------------------------------------------------------------------- Rip Curl might claim that any move to go public like rivals Quiksilver, Billabong and Globe remains in the pipeline, but in December it appointed a chairman with considerable street cred if it did. --------------------------------------------------------------------- Rip Curl brought James Strong on board as chairman as the largely debt-free company pursues an aggressive expansion plan likely to demand access to more capital. --------------------------------------------------------------------- Turning to the outlook, Perrin was confident the company was on target to maintain historical revenue growth rates of 25 per cent. He said the company would continue to observe essential management disciplines, which had proved successful in Billabong's 29-year history. --------------------------------------------------------------------- "These factors include the continual building of strong relationships with selected retailers, the observance of a focused marketing strategy based around high-profile and emerging athletes and events and the strict observance of a limited distribution policy," he said. ---------------------------------------------------------------------
BBG Price at posting:
0.0¢ Sentiment: None Disclosure: Not Held
