Billabong tries to surf chief-dump wave
BILLABONG last night moved to quash rumours that embattled chief executive Derek O'Neill would soon be dumped by the board, amid growing concern among major investors about the surfwear company's performance.
BILLABONG last night moved to quash rumours that embattled chief executive Derek O'Neill would soon be dumped by the board, amid growing concern among major investors about the surfwear company's performance.Sources close to the company last night said they expected Mr O'Neill, who has been with the Australian surfwear company for more than 20 years, to be removed as CEO in the face of declining sales and rising debt.Billabong chairman Ted Kunkel said last night: "I categorically deny the suggestion."A soaring Australian dollar and slumping retail sales in the key markets of Europe and the US have compounded Billabong's woes.That has severely affected the company's share price, and in particular the wealth of founder and major shareholder Gordon Merchant. Mr Merchant founded Billabong on the kitchen table of his Gold Coast house 40 years ago.After reaching a high of $13.17 a share in 2008, Billabong yesterday closed at $1.845 a share.Mr Merchant, who owns more than 13 per cent of Billabong, has seen his personal fortune slump from more than $900 million in 2007 to less than $300 million. In the past six months, his shares in Billabong have fallen by more than $135 million in value.Sources said Mr Merchant had been a long-term supporter of Mr ONeill, who was appointed CEO in 2003 after a decade in senior roles with the company. But, they said, recent troubles meant it was time for change at the top.There has also been speculation since Christmas that Mr Merchant would move to regain day-to-day control of the company.Since 2008 Billabong has increased the number of company-owned outlets from 380 to 639 in 60 countries.According to sources close to the board, it was Mr O'Neill's decision to move from a mere supplier of surfwear and fashion goods to a vertically integrated company with its own network of stores.It was a strategy approved by the board and Mr Merchant, who remains a director of the company.When earnings were downgraded just before Christmas, the share price collapsed from $4 to $2.02, wiping more than $400 million from the company's value.Billabong pointed to a rapidly deteriorating sales performance across all its markets as a reason for the downgrade.It is now one of the most shorted stocks on the Australian Securities Exchange. The company has not responded to published reports of rumours that it may breach its debt covenant.