Billabong has swung into the black for the first time in three years thanks to asset sales, downsizing and cost cutting.
The surf and sports clothing retailer made a $25.7 million profit in the six months to December 31, up from $126 million loss in the same period a year ago.
Despite the better than expected result, investors were not impressed, sending Billabong shares down 2.5 cents, or 3.9 per cent, to 61.5 cents.
That was likely caused by a 4.5 per cent fall in sales in its Asia Pacific business, due particularly weak sales in Australia in the leadup to Christmas.
IG Markets strategist Evan Lucas said sales disappointed and it remained unclear how the retailer would fare in the second half of the year.
"The outlook is still very muddled and dependent on how they operate in Europe," he said.
"Their Australian retail sales numbers were also weaker than they were hoping and definitely weaker than what the market was expecting."
Options Xpress market analyst Ben Le Brun said a lot of work was still needed to turn the business around.
"The way they are improving their bottom line is through restructuring, writedowns and cost savings," he said.
"It's a very limited way to grow the business."
Chief executive Neil Fiske said it was encouraging to see the group return to profitability for the first time in three years only a year into a restructure.
There were positive signs of brand growth and improved margins in the group's three biggest brands - Billabong, RVCA and Element, he said.
"We are getting traction and seeing some promising results," Mr Fiske said.
"Yet we know we have a long way to go and much to do before we will be satisfied with our performance."
The company sold online retail store Swell and its 51 per cent stake in online retailer Surfstitch in 2014, after selling Canadian retailer West 49 and outdoor clothing company Dakine in 2013.
Mr Fiske said the group's sales in the US rose 9.5 per cent and there were strong like for like sales growth in Europe.
BILLABONG SWINGS INTO THE BLACK
* Net profit of $25.7m, up from $126m loss in 2013/14
* Revenue of $541.1m, down 19pct from $670m
* No dividend, unchanged
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