Surf companies' profits continue to nose dive

The chilly weather has not done Aussie surf retailer Billabong any favours this summer.

The Gold Coast-based company’s shares have plummeted 34 per cent since forecasting a significant earnings decline for the first half of the financial year, forcing the iconic surf brand to issue a profit downgrade to the ASX.

In addition to the cold, wet summer sweeping Australia, Billabong blames its low earnings on slow sales in Europe, a late start to the northern hemisphere’s winter weather, and tough trading conditions in North America.

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"The reasons for the sales slowdown vary by region, but the data received reflects the European sovereign debt issues and the ensuing fears of global recession which are impacting consumer confidence and spending patterns significantly," the statement read. Billabong is reviewing its capital structure with advisor Goldman Sachs.

Clothing sales, particularly swimwear and shoes, have been hit the hardest this summer, according to Australian Retail Association (ARA) executive director Russell Zimmerman.

In Melbourne for example, the first four days of December never rose above 21 degrees, making it the coolest start to summer in 24 years, Weatherzone senior meteorologist Josh Fisher told the Sydney Morning Herald.

In slightly happier waters, troubled surf brand Hot Tuna has signed a wholesale and distribution deal with International Fashion Group Australia to expand its brand across the Indian Ocean.

"We are developing a strategy for the Hot Tuna brand to enter the rapidly expanding South East Asia market," Hot Tuna executive chairman Francis Ball told Just Style.

Here’s to hoping the sun shines more brightly for Australia’s surf wear companies in 2012.