Launa Inman takes her seat at the helm of surfwear company, Billabong International (ASX: BBG) next Monday 14 May, but she is spending today calling and introducing herself to the struggling company’s executive leadership team around the globe.
As the new CEO, replacing the 20-year incumbent Derek O’Neill, Inman says her priority is a “discovery” phase, during which she will ask leaders across Europe, the United States and Canada, what they think is needed to solve the company’s woes, which include a 40% fall in net profit from $167.3 million in 2006-07 to $119.1 million in 20101-11, and flat sales.
Inman will extend her questioning to customers, middle managers and to frontline sales staff. She had been with the company for two months as a consultant, but has only reviewed the Australian operations. Inman says there is no timeframe on the discovery phase. “It is about going into stores and talking to customers and people on the shop floor. And I have to meet the customers of the wholesale business about the challenges they are facing.”
That is the way Inman does leadership. “There is no right or wrong answer,” Inman says. “What happens in some organisations that are in distress, especially if there is a large turnover at senior level, is the people in middle management put their heads down. They can be the blockers or embracers of change. A leader is about getting in there and really understanding what is happening in the business.”
So how will Inman get Billabong’s frontline staff and middle managers to open up to her?
“That is always a challenge in any organisation,” says Inman, “but my first take on it is that people here are really passionate about what Billabong stands for and they want it to be successful again. My sense is that people here are very open, not that they are finger pointing, but they are willing to talk about the things they are facing.”
What Billabong is facing is a catastrophic fall in its share price of recent years. Revenue rose 2% in Billabong’s first half results for 2011-12 to $850 million as a result of acquisitions, but underlying net profit fell 46% to $31 million (a goodwill impairment charge reduced the actual profit to $15 million).
The company sold its most promising brand, Nixon, and halved its debt in time to avoid breaching bank covenants, but it still carries a lot of debt, making existing shareholders worry that their poorly performing returns will be further eroded by capital raising, or perhaps even a takeover.
Some analysts have blamed factors beyond the control of the company’s management: the weather and shocking economic climate in Europe.
But Inman is convinced that there are answers to be found to the company’s woes, and she will find them on the frontline. This approach has worked for her before.
During Inman’s former leadership roles within retailer Target, where she was initially general manager of merchandise and later managing director, consultation and communication helped her dramatically change the then-faltering company’s results.
“I joined Target in 2001, and within a couple of months, the company posted a $32 million loss in second half,” she says. “It was a pretty stressful time for the organisation. They bought in a new managing director, and a lot of people were promoted.”
“What was really key there, how we turned the business around was by clearly understanding how the customer perceived the brand, going out and making sure we returned to our core competencies, and then satisfying the customer. Those three things.”
Online is important, but Inman says emphatically: “Do I think bricks and mortar are dead? No I don’t! Customers are always looking for shopping experience.” She points out that retailers in the Unites States and Europe still sell only between 10-15% of goods online.
The issue is not how customers buy, she says. “If you say, where did you buy the top, the answer is I got it at Billabong’.” What customers want is multiple ways to buy, she says – omni-channel marketing in retail jargon.
Some analysts are worried that the board has not renounced its own strategy for the company’s turnaround, which appears to have failed, and that Inman might be hamstrung in what she can change.
Inman is approaching the task with an open mind: “I feel I have been given a good brief, and my job is an assessment of whether that is right strategy. If I am going to change it, in conjunction with the leadership team, to articulate to the board, why and what would we do differently.”
Others are worried that Inman will not fit in to the male surf culture – she admits that does not surf – but Inman says she does not find the organisation macho. “I haven’t experienced it to date, I would like to feel everyone has got the company’s interests at heart. And remember that 52% of team members are women.”
Chairman, Ted Kunkel, was asked why he should not resign in an analysts’ briefing yesterday, but he held on saying: “I’ve got a duty to the enterprise to get the right management in place, the right skills set in place and to support that management.”
How will Inman regroup the troops in the demoralised company? “I think the most important thing is to clearly demonstrate I am here to learn and listen. There is not one person who is leading the company; all of us have a part to play in getting it back to its former glory.”