After the heavy losses recorded for its fiscal year ended June 30, 2017, Billabong International's loss for the six months ended Dec. 31 widened by 40 percent to 18.4 million Australian dollars (€11.7m-$14.4m) from the corresponding period of the prior year.

The financial report was in line with previous guidance. It came a few days after the Australian-based company's board of directors approved the proposed acquisition of the group by Quiksilver's holding company, Boardriders, for A$298.8 million (€190.4m-$233.2m) giving Billabong an enterprise value of A$380 million (€241.5m-$297.9m). The purchase price represents a 28 percent premium on the stock's trading price before the announcement of the takeover offer and almost twice the average stock market price in the previous six months.

Meanwhile, following an order issued by Australia's Federal Court, Billabong's shareholders have been convened to a meeting on March 28 to approve its takeover by Boardriders, but Oaktree Capital Management will not participate in the vote. Oaktree controls Boardriders directly and indirectly. It is one of the two senior lender to Billabong and owns 19.3 percent of the company's shares.

Billabong's revenues for the first half - excluding recently discontinued operations such as Tigerlily, which was sold to Crescent Capital Partners last year - were down by 3.1 percent from the year-ago period to A$474.5 million (€301.6m-$372.0m), or by 1.5 percent in constant currencies, weighed down by poor performance in the Asia-Pacific region. Furthermore, the company's Ebitda went down by 19.1 percent to A$19.3 million (€12.3m-$15.1m), or by 15.9 percent in constant currencies.

The management attributed the declines to a revenue shift in the wholesale shipping pattern in Europe, and a shift in the timing of some Billabong global marketing costs from the second half into the first half of the fiscal year.

However, the gross margin advanced by one percentage point to 52 percent and was up in every region, due to continued progress in global sourcing and concept-to-customer initiatives.

The management said these results reflect “a challenging industry undergoing tremendous change.” It noted that it has made substantial progress over the last four years, but had to confront adverse currency movements in its product costs, industry bankruptcies and account closures across multiple geographies, and channel shifts away from brick-and-mortar retailing.

The results varied among the company's big three brands: Billabong, RVCA and Element. Billabong's wholesale-equivalent sales, including sales to its own retail stores, were down by 0.5 percent, while Element fell by 13 percent, impacted by the timing shift in Europe and a change in distribution strategy in Canada. RVCA was up by 9.6 percent, with growth in every region.

In Europe, the group's results were affected by the timing shift in wholesale revenues and weaker-than-anticipated retail results. Sales were down in the region by 3.7 percent to A$81.7 million (€51.9m-$64.1m), or by 6.1 percent in constant currencies. While the regional gross margin improved by one percentage point, Ebitda prior to global allocations went down by 29.4 percent. Retail performed below expectations, with comparable store sales decreasing by 2.3 percent. Meanwhile, e-commerce grew by 15.1 percent and now represents 5.5 percent of European sales.

The Americas region performed well, which the company attributed to the benefits of change initiatives undertaken in the past four years. Sales in the region improved by 1.1 percent to A$194.2 million (€123.5m-$152.2m), or by 3.9 percent in local currencies. E-commerce grew by 19.5 percent in this region, representing a high level of 9.6 percent of sales. Comparable store sales inched up by 0.7 percent in constant currencies. Ebitda prior to global allocations went up by 34.1 percent.

On the other hand, Asia-Pacific saw sales decline by 6.6 percent to A$198.6 million (€126.2m-$155.7m), or by 4.5 percent on a currency-neutral basis. Billabong said this reflected ongoing weak market conditions, but also the lag effect of some assortment and execution issues that the company has previously identified and have been addressed. Comparable store sales were up by 0.9 percent across the region, but retail conditions remained challenging in Australia, where comparable store sales ended down by 0.6 percent. E-commerce grew by 28.7 percent, with a 40.2 percent increase in Australia. Ebitda prior to global allocations for the region decreased by 9.2 percent in constant currencies.

Moving forward, the company confirmed its guidance for its the current fiscal year. It is expecting Ebitda, excluding significant items, to slightly exceed last year's level of A$51.1 million (€32.5m-$40.1m) through a rebound in the second half.

The acquisition of Billabong International by Boardriders is now projected to close by April 24, although it remains subject to conditions including shareholder, court and regulatory approval. Upon completion, it will form a global player with some of the industry's most iconic brands and total annual sales of about two billion U.S. dollars, generating combined Ebitda of around $100 million before synergies. According to Boardriders, the tie-up will create a company with more than 630 retail stores in 28 countries, plus online sales operations in 35 countries, and more than 7,000 wholesale customers in over 110 countries.

Boardriders plans to fund the acquisition and refinance debt by taking on a term loan of US$450 million.