License article

The trick now is to blend some polish with the grunge

Billabong International's Ted Kunkel is convinced he now has the right chief executive, in the talented former Target boss Launa Inman, to turn the surfwear business around.

His shareholders need a little more convincing, judging by the market's reaction yesterday. Although it is difficult to separate the latest bout of Euro fears from Billabong's performance - it should benefit from Australia's lower dollar, but not if there is an economic maelstrom - yesterday's 11¢ fall in its shares to $2.29 was about 4.5 per cent, or five times the general market.

Inman ran the discount-but-not-downmarket department store group for seven years, under the old Coles-Myer structure and later with Wesfarmers, which means she brings a whole range of retailing skills - sourcing, supply chains, brand marketing - to the job. They are the sorts of skills with which Kunkel is familiar from his former life running the brewer Foster's.

Target's customers are, though, mostly female. They roam crisp, fluoro-lit, polished lino and chrome-racked worlds.

Billabong's shoppers might no longer be Kombi-driving, sandy-footed surfers but they do include teens and once-were-teens who want to dress to give the impression they know one end of a surfboard from another - and they are mostly male.

Inman's challenge is to make Billabong work in a retail sense, broadening the attraction of its many fashion and accessory brands, without losing the rusted-on customers.


Kunkel has had a bet each way in that regard, being careful to promote the most likely internal candidate to run Billabong, the head of its North American business, Paul Naude, to ''President of the Americas''.

While the title will not annoy Barack Obama, it does suggest that Naude ran a close second for the top job, and that by keeping his seat on the board as an executive director he both gives Kunkel options and Inman a constant reminder to be on her game.

As for Inman's predecessor, Derek O'Neill, as Insider noted last December when the company's stock halved after a massive profit downgrade - his job, and that of Kunkel, hung by a thread. Billabong founder, and still significant shareholder, Gordon Merchant was ropeable about the decline.

Kunkel denies he snapped O'Neill's thread in mid-February, but it is known he approached Inman about that time to join the board. She rejected the offer because she felt she had more to offer as a chief executive than a professional director. The short-term compromise was Kunkel hiring her as a consultant.

He forcefully denied rumours at the time that he was about to despatch O'Neill - technically accurate, but sentimentally disingenuous.

Inman was allowed a graceful exit last year at Target when it became apparent to the retailer's owner, Wesfarmers, that fresh blood was needed. Although her going was announced in September, she did not leave until the end of 2011.

O'Neill, on the other hand, was barely thanked and bundled into the back of a Kombi van.

How Billabong pays him out will be interesting, because his contractual arrangement was 24 months notice if terminated by the company - which is about $2.6 million, given his base pay was $1.3 million. O'Neill has not collected a bonus in more than two years.

Inman is coming in on $1.3 million, with a $100,000 ''golden hello'', with which she is expected to buy shares.


ASX officials took a leaf out of Wayne Swan's book this week, challenging a few companies on why they were running deficits rather than surpluses - and triggered a couple of huffy responses.

Northern Mining company secretary Ross Kestel agreed with the ASX that the company might not have sufficient cash to fund exploration activities this quarter, but only ''if it did not intend to undertake cash raising activities''.

That was mild compared with Southern Cross Exploration's Evelyn Goh, who tartly reminded the exchange that ''negative cash flow is nothing unusual for junior explorers''.

''In fact,'' she continued, ''if one examines the financial position of many exploration companies listed on the ASX, one will find a large number in similar situations.'' Still, with only $2000 in the bank at the end of March, it is probably time to dip into someone's piggybank.

Shareholders in Southern Cross, directed and chaired by the indefatigable Boris Ganke for 36 years, certainly know more than most about the long road to finding something exploitable.

The Northern Mining query did, though, elicit news for shareholders because it revealed that the company has been liquidating its $240,000 stake in Macphersons Resources, and is trying to sell three exploration assets including a nickel prospect in Poland.


Supermarket giant Woolworths this week found a way of clawing back some of the ''deflation'' of grocery prices by bumping up its delivery charges for online shopping.

Those who spend between $100 and $200 have been the most obviously hit - even though the price lift is only $2 an order, that is a price increase of 28.5 per cent for some.

Probably its most deft move, though, is deciding that you have to spend $300 for a free delivery, rather than $250.

Woolies earns about 5¢ after tax on every $1 of goods sold - so a $2 delivery charge is the equivalent of you buying $40 more at the checkout.

Unlike Qantas and others who blame fuel costs, or bank fees, for hitting consumers, Woolies did not bother to blame anything other than ''a review of our delivery charges''.