Wednesday 3rd August 2011 |
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Macquarie has upgraded global sports clothing retailer Billabong (ASX: BBG) to Outperform.
BBG’s interim result for the first half ending 30 December 2010 was a shocker by its high growth standards, impacted by a large degree by a strong AUD versus most major currencies. EBITDA of $94.6 million was a large decrease of 17.3% in constant currency terms (a decrease of 23.4% in reported terms) as BBG felt soft retail conditions in its home turf of Australia.
BBG itself views the financial year ending 30 June 2011 as a transition year, and group sales revenue for the full financial year ending 30 June 2011 is expected to be in the order of $1.7 billion, representing an increase in the order of 25% in constant currency terms. BBG expects its net profit for the financial year to 31 June 2011 to be 2% - 6% lower in constant currency terms.
The Outperform rating comes at a time when Australian retail sales data, released today, was weaker than expected in June 2011 falling 0.1% on a seasonally-adjusted basis vs an expected rise of 0.3%. The weak retail data adds to increasing gloom in the Australian retail sector which is expecting weaker profits over the near term as consumers remain cautious.
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Broker recommendations are sourced from the IRESS software trading platform and Morningstar equity analysts.
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