Profits at Rip Curl have gone backwards at the global surfwear group as it was buffeted by a distressed US sports distribution network and retail collapses. The privately owned company has been a standout in the $13 billion global surfing market in the past couple of years, recovering from a $4 million dollar loss in 2012 to build profits on the back of strong growth in North America and Asia.
However Rip Curl has called out a disappointing 2016 result as net profit more than halved to $10.06 million in the 12 months to June 30 from $23 . 3 million a year earlier. This was despite a 7 percent lift in sales to $476.55 million.
Underlying earnings by the group, which was founded in Torquay in Victoria in 1969 by Australian surfing mates Doug ‘Claw’ Warbrick and Brian ‘Sing Ding’ Singer fell 29.5 percent to $35.56 million before interest, tax, depreciation, according to newly filed annual results.
Rip Curl said it had continued to pursue quality sales and solid margins and avoid heavy discounting common to other retailers. However the bottom line was undone by it’s North American business, where tough retail trading conditions and bankruptcies in the sector triggered bad debt provisions and sent Rip Curl inventories higher.
Rip Curl are operating in a tough environment in the region, with sports distribution – a key network, clearly in distress and a number of key players entering into bankruptcy during the year. A number of poorly performing department stores and mainstream retailers had also sought bankruptcy protection or launched restructuring.
The Rip Curl – North American business is solid and sustainable but a regional recovery would take time.
The group paid $9.3 million of dividends during the year.