Billabong shares slump on profit warning

Billabong shares slump on profit warning

Shares in clothing company Billabong International (ASX:BBG) fell as much as 42 cents on Wednesday after the company warned its expects its FY11 profit to decline due to the run of disasters in Japan.

Billabong is now forecasting a 2% to 6% decline in profit in constant currency terms, compared to its previous guidance of flat profit.

The company said that while its offices and warehouses in the country appear to have suffered no direct physical damage, a number of its 44 company-owned stores have been affected.

These stores contribute around 60% of Billabong's sales revenue in Japan.

After the major earthquake and subsequent tsunami, 19 stores were closed due to damage, loss of power or evacuation. And 18 still remained closed as of Wednesday, Billabong said.

The disaster losses could be compounded by the Christchurch earthquake, where three of its stores remained closed.

But Billabong said the Christchurch disaster on its own would not be enough to materially affect its overall business.

BBG shares, after closing Tuesday at $7.770, fell to a low of $7.280 on the news. But the shares mostly recovered throughout the rest of the day, closing at $7.610.

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Tags natural disasterBillabongClothingGuidanceASX:BBGprofit warning

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