Battered Rip Curl resurfaces
Although revenues declined slightly for the year, the surfwear group did manage a robust 41 per cent boost in pre-tax earnings, with favourable currency movements also bolstering its sizeable offshore business.
The rebound for Rip Curl comes at a tough time for most other retailers, especially those involved in surfwear, with Billabong racking up billions of dollars in losses over the last few years and Quiksilver posting four years of successive losses.
Rip Curl's earnings turnaround in 2013 is from a loss of $4.056 million in 2012 when challenging trading conditions crimped profitability. Its accounts were further drenched in red ink when the privately owned group was forced to also swallow $4.5 million of costs for a restructure as well as incurring substantial acquisition accounting charges.
But Rip Curl, which is chaired by Australia Post chairman Ahmed Fahour, said its 2013 result had shown a "significant improvement" on the previous year.
In financial documents obtained by BusinessDay, the surfwear retailer said most of its regions had reported better trading conditions during fiscal 2013.
"Whilst our European business continued to feel the effects of the tough economic conditions in the region, our Australian, North American, Indonesian and South African businesses all performed strongly and in line with management expectations."
Revenue for the year ended June 30, 2013, fell from $412.53 million to $398.34 million, but pre-tax earnings remained strong.
"Despite consolidated revenues declining 3.4 per cent this year due to expense rationalisation across the business and a significant reduction in abnormal items this year the group has recorded a 41 per cent growth in EBITDA."
Rip Curl said its restructure activities were complete and the costs to date had been covered by provisions raised in the prior year. No dividends were declared for the 2013 financial year.
The 2013 accounts show Rip Curl has assets of $259.2 million and liabilities of $173.2 million which include nearly $95 million, in short- and long-term borrowings.
In September BusinessDay reported that the founders of Rip Curl, Doug Warbrick and Brian Singer, had stepped down from the company they created in the late 1960s. The duo retain a 72 per cent stake in the company.
The retailer recently abandoned a planned $400 million sale due to tough market conditions.
Frequently Asked Questions about this Article…
Rip Curl swung back to profitability in 2013 by benefiting from improved retail trading conditions across various regions and a successful restructure in 2012. This led to an after-tax profit of $14.12 million, despite a slight decline in revenues.
The 2012 restructure had a positive impact on Rip Curl's financial performance, contributing to a 41% boost in pre-tax earnings in 2013. The restructure costs were covered by provisions raised in the prior year, helping the company return to profitability.
In 2013, Rip Curl's performance was notably better than other surfwear companies like Billabong and Quiksilver, which faced significant losses. Rip Curl managed to report a profit, while its competitors struggled with financial challenges.
Rip Curl's success in 2013 was driven by strong performances in Australia, North America, Indonesia, and South Africa. These regions reported better trading conditions, aligning with management expectations.
No, Rip Curl did not declare any dividends for the 2013 financial year, despite achieving profitability and a significant improvement in earnings.
As of 2013, Rip Curl had assets totaling $259.2 million and liabilities amounting to $173.2 million, which included nearly $95 million in short- and long-term borrowings.
Rip Curl abandoned its planned $400 million sale due to tough market conditions, which made the sale less feasible at the time.
Rip Curl was founded by Doug Warbrick and Brian Singer in the late 1960s. Although they stepped down from active roles, they still retain a 72% stake in the company.
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