Surf Wear 79

Surf and skate wear maker Globe International has more than doubled its annual profit, thanks to higher margins and a surge in sales.

With rights to popular labels like Mossimo and Stussy as well as core brands Mooks, Sista and M-One-11, Globe has mirrored the success of its only listed competitor, Billabong, cashing in on the growing popularity of action sports both here and overseas.

In June, the group expanded into skating hardware, with the purchase of California-based Kubic for $81 million.

Shortly I'll be joined in the studio by Globe's chief executive Robert Hershan, but first, Michael Rowland reports on the rise of Australia's surf wear industry.

MICHAEL ROWLAND: Australia's surf and sportswear makers are riding a wave of success.

What was once a garage industry is now worth billions of dollars and it's momentum is showing no signs of slowing.

DEREK PASS, MACQUARIE EQUITIES: They've really done well these companies.

MICHAEL ROWLAND: Globe International has been particularly successful, from its unprepossessing corporate headquarters in Port Melbourne, Globe turns out surf, skateboard and ski wear that's sold everywhere from the US to Japan and selling it is.

The company's net profit has soared 154 per cent to $25 million, on the back of a 43 per cent increase in sales to $220 million.

DEREK PASS: Well, because their target market is growing quite dramatically.

The three sports that they concentrate on - skiing, snowboarding and skating - they're three of the fastest growing sports in the US at the moment and that's what's powering a lot of growth.

MICHAEL ROWLAND: It's not only Globe's products that are in high demand - its shares have been keenly sought as well.

Since listing in May last year, Globe's share price has risen to the point where initial investors are now enjoying gains of more than 60 per cent.

Despite the profit surge, Globe's shares closed more than 3 per cent weaker yesterday at $1.66.

Globe's success highlights just how well surf and sportswear stocks have fared over the last couple of years.

The Gold Coast-based Billabong International listed in mid-2000 at $2.30 a share.

Despite falling over the last few sessions, they've still proven to be a very good buy, closing yesterday at $7.99.

The warm market reception enjoyed by the likes of Globe and Billabong, has proved very enticing to competitors such as Rip Curl, which is planning its own public float.

DEREK PASS: As we've seen, from the results of these other two companies, it's the surf wear – sports wear market is one where there is a lot of growth, so it could well be a good time for someone like Rip Curl to be looking at listing.

MICHAEL ROWLAND: It's a market sector that'll be riding high for some time to come. Michael Rowland, Business Breakfast.

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