MOSS ADAMS CAPITAL: Apparel and foowear market monitor highlights notable deals, stock prices and results.
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I spoke with Globe International Limited CEO Matt Hill Sunday about the company’s half-year earnings results.
Globe is based in Australia and reports earnings every six months. In addition to its namesake brand, Globe is home to Dwindle Distribution and brands such as Enjoi, Blind, Darkstar and others with operations in North America and Europe as well as Australia.
Matt said the company saw the economic downturn coming and made the hard decision early to significantly restructure its business instead of waiting. It started planning the restructuring in August 2008, and by Dec. 31 the plan had been implemented.
That early reaction allowed the company to be profitable throughout 2009, he said.
The cuts were significant – in North America alone, headcount was reduced by 38%.
By January 2009, Globe had completed its cuts which allowed the company to get back to work in the new year and focus on improving the business without going through several more rounds of layoffs.
“It really made a difference,” he said. “People didn’t have to look over their shoulder.”
Those hard decisions are reflected in the company’s more recent results for the six months ended Dec. 31. (All figures are in Australian dollars.)
Net Profit After Tax was $832,000 vs. a loss of $9.3 million in the same period last year.
Revenue declined 22% to $47.5 million. In constant currency, revenue declined 10% excluding charges.
In Australia, revenue fell 31% to $14.7 million.
In North America, revenue fell 18% to $24.5 million.
In Europe, revenue declined 14% to $8.8 million.
All regions reported a first half EBITDA profit.
At the end of December, the company had no debt and $13.3 million in cash. The cash position improved from $4.4 million in the same period last year.
Because Globe has lived within its means, the company has been able to be opportunistic in the downturn, Matt said, pointing to its purchase of European skateboard brand Cliché last year.
I asked Matt how he is feeling about the economic environment now.
“At a macro level, I don’t get the sense that the market is getting any easier or that retail is getting more buoyant,” he said. “We’re still very, very cautious about the market.”
Matt said Dwindle Distribution’s Enjoi brand is doing very well, and the company’s namesake Globe brand is enjoying a bit of resurgence thanks to its cruiser skateboards and better product.
Globe footwear orders are up, he said.
In hardgoods, Dwindle is focusing on technological developments in skateboards. In general, hardgoods sales have flattened but are not a disaster, he said.
Looking forward, the company plans to introduce its Cliché brand in North America and continue to focus on product improvements for its brands.
Overall, Matt said he is pleased with the company’s position in the downturn. Because of its early structuring and its healthy financial position, “2010 will be a positive, step-forward year, not a backward year,” he said.