Surf wear giant Billabong will acquire 38 stores from competitor General Pants Group under the Surf Dive’n’Ski and Jetty Surf names, the company announced today.
Chief executive Derek O’Neill said in a statement the acquisition, for which a price was not disclosed, will bring the company’s global portfolio to 558 stores and will also include two licensed Billabong stores.
“SDS was one of Billabong’s earliest retail customers so we have had a strong working relationship over many decades,” O’Neill said.
“We entered acquisition discussions with the view to preserving the assets as core board sport retail doors and ensuring a route to market for the Group’s strong portfolio of brands.”
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O’Neill said the acquisition will help strengthen the business in Australasia, and will contribute approximately 3% of revenue during the2010-11 financial year. The EPS benefit in the current financial year will be neutral, the company said, with the transaction to be completed on November 1.
He also said the acquisition will provide significant benefits for the company in terms of synergising production lines.
“The acquisition presents the opportunity to extract significant synergies in areas including warehousing, distribution, back-office support and overall retail management consolidation,” he said.
“Additionally, direct retail operations greatly enhance Billabong’s visibility into the buying trends of the end consumer and assist in the speedy development and delivery of on-trend product to both Company-owned and independent retail accounts.”
The announcement comes after Billabong announced a 4.5% decline in annual net profit to $145.99 million, sending its shares down 10% to $8.04. It blamed weak retail environments in the US and continued discounts in Australia.
This morning Billabong shares gained 0.38% to $8.00.