Cold Australian summer sees swimwear profits plummet

Jonathan Pearlman – Telegraph.co.uk December 20, 2011

Several clothing and department store chains have cut prices or closed outlets and shares in surfwear company Billabong today fell to a record low. The company said its profit could fall by as much as 26 per cent.

The unseasonal damp cool conditions – including the coldest start in Sydney since 1960 – has been blamed for a slump in Christmas shopping and big falls in sales of clothing and shoes.

“Clothing retailers are still doing it fairly tough out there,” said Russell Zimmerman, from The Australian Retailers Association. “The weather has been too cold for them – they need that really good run of hot weather and they haven’t seen it.”

The rain and cold, blamed on the La Nina weather cycle, has affected much of Australia’s eastern seaboard. Two weeks ago, the city of Brisbane recorded its coldest December day for 123 years.

The poor weather has forced stores to heavily discount of swimwear and summer clothing, with the big department store chain David Jones dropping prices by 30 per cent.

“If it was a hot summer people would have been buying bikinis,” the chain’s corporate affairs manager, Helen Karlis, told Fairfax newspapers. 

“It’s the coldest summer we’ve had in 50 years.”

Other factors are also hurting Australia’s retail sector. Despite a recent cut in interest rates, Australian consumer sentiment remains low and the strong dollar has led to an increase in internet shopping.

Government figures show sales of clothing, footwear and personal accessories are down 2.2 per cent this year and department store sales were 3.3 per cent below last October.

The country’s other big department store chain, Myer, has announced plans to close outlets and reduce the size of surviving stores, citing the impact of online shopping and the gloomy consumer outlook.

Billabong said today its sales had been “significantly affected” by the bad weather.

“The poor weather has continued into December and is reflected [in] store sales declines,” a statement said.

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