Shares of sporting apparel heavyweight, Billabong International Limited (ASX: BBG) were trading as much as 4.7% lower today following the release of its half-year results.
In the six months to 31 December 2014, Billabong's net profit after tax, or NPAT, was $25.7 million, up from a loss of $126.3 million in the prior corresponding period. However, excluding significant items NPAT was $13.8 million.
Despite achieving its first profit in three years, the company said it has yet to experience universal progress on its turnaround strategy.
Nonetheless, CEO Neil Fiske said, "A year into our turnaround it's encouraging to see the Group return to profitability for the first time in three years. There remains though significant operational reform to be undertaken."
In the USA – the group's key market – revenue grew a marginal 0.9% year on year, to $195.2 million, however brand Billabong sales were up 9.5%.
Soft trading conditions during Australia's busy Christmas trading period saw retail sales in Asia-Pacific drop 4.5% on a comparable store basis.
Mr Fiske said the mixed results highlighted the need for an omni-channel growth strategy, "While a lack of consumer confidence in recent months has impacted on this result, it reinforces our view of the importance of a move to an omni-channel strategy both in this market and globally."
The company will begin to focus on direct-to-customer initiatives and improving consumers' experiences across multiple platforms.
Is Billabong a buy?
Billabong could be at the beginning of a significant turnaround in operations. However as Mr Fiske noted there's still, "significant operational reform to be undertaken." With half-year earnings per share at 1.5 cents and no dividend on offer, shares appear fairly priced. As a result, I'd probably prefer to hold off buying Billabong until we get more evidence that the group's turnaround is gaining traction.
