Shares to Sell Billabong (BBG)

Billabong BBG ASXBillabong (BBG) is a major international retailer whose core business is the marketing, distribution, wholesaling and retailing of apparel, accessories, eyewear, wetsuits and hardgoods under various brands.

BBG has been one of the shares to sell in 2010 amid declining consumer demand brought about rising interest rates and financial market volatility.

On 15 December, BBG downgraded its first half profit guidance.  The group now expects 1H11 net profit to fall 8% – 13% from a year ago, compared to its previous guidance of only a slight fall.

1H11 EBIT is expected to slump 25% on-year, primarily due to unseasonable weather impacting sales and weaker-than-expected consumer spending patterns in Australia.

Furthermore, sales in the US have been impacted by a shift in seasonal orders, which will push expected sales into the 2H10.

As a result, Billabong is now forecasting full year net profit to be flat on-year, compared to the previous 2% – 8% growth.

BBG shares sank 8.9% on its revised guidance, making it one of the worst performers in the Australian share market.

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