Billabong’s Rise Follows Pacific Sunwear

Billabong International Ltd. expects U.S. sales to rise 25% in the second half because its biggest buyer, Pacific Sunwear of California Inc., is expanding its chain of stores.

Pacific Sunwear, an Anaheim-based teen-clothing retailer, said Tuesday that sales in the three months ended Feb. 4 rose 38% from a year earlier. That’s good news for Billabong because Pacific Sunwear, which plans to almost double its stores in the next three years, accounts for 20% of its U.S. sales.

“We’re expecting a good year,” said Matthew Perrin, Billabong’s chief executive. As Pacific Sunwear expands “they are looking to us” to help stock their stores.

Perrin said he is confident Billabong will boost second-half sales. The United States is Billabong’s biggest market, accounting for 45% of sales, with Australia and New Zealand representing 36% and Europe the balance, he said.

Billabong, which began operations in 1973, makes clothing and other accessories, such as hats and backpacks, for surfers and beach-goers.

J.B. Were & Sons analyst George Batsakis said in a four-page report Tuesday that Billabong has increased sales and market share at the expense of smaller surf wear brands as the result of extended product range, especially girls’ wear.

Pacific Sunwear, which had 589 stores in January, opened 139 stores in the 12 months to January, and will add 125 stores this year. They plan to open more than 425 over three years. Around 100 of these will be in Europe, with the roll-out expected to start by December 2002.

The chain store, which has a market value of $900 million, has also launched television and print ads in the past month, as well as sponsoring the “X Games,” one of the most popular television sports events watched by U.S. teenagers, said Were’s Batsakis, who rates Billabong as a “buy.”