Salty Crew’s Parent Company Shows Profit Improvement

Globe International Limited, the parent company of a wide range of brands including Salty Crew, Globe, Impala, and FXD workwear, reported a sharp profit improvement for the six-month period ended Dec. 31, the company said Thursday.

Net sales totaled AUS$108 million ($70.9 million), down 10.4% compared to the same period last year. Last year, the skate hardgoods market was in free fall and the company was forced to run major liquidation events, which hurt profits but boosted sales. If those liquidation events are excluded, total company sales this period fell 3.5%.

Earnings before interest and tax (EBIT) was AUS$7.3 million ($4.8 million) or 6.8% of sales. That was an AUS$6.4 million ($4.2 million) improvement from the same period last year, when EBIT accounted for 0.7% of sales,

Net profit after tax improved to AUS$4.9 million ($3.2 million) compared to AUS$200,000 ($131,000) in the prior year period.

Apparel and Footwear Brand Results

Globe International does not break out financials by brand. But it did say the company’s footwear and apparel brands reported either flat or modest increases in global revenue despite the challenging market conditions.

North America and Europe Improve

The better company results were boosted by improved profitability in the North American and European markets, while the Australian market continued with its stable profit profile.

“This was a major step toward forward in our strategic goal to see more even contribution of EBIT from all three regions,” CEO Matt Hill said in an earnings release. “This is forecast to continue in the second half.”

The European business in particular had been struggling but improved significantly during the six-month period.

“A successful restructure of our European division was executed with new management delivering a remarkable turnaround for the division after a massive loss in the (prior year period), Hill said.

More Apparel and Footwear, Less Hardgoods

The company’s history is in skate hardgoods. However, it has been shifting its strategy over the past few years to focus on more profitable apparel and footwear brands, which are categories that also have less volatility.

It has sold several smaller skate hardgoods brands, while at the same time focusing on two hardgoods brands with global scale – Globe and Impala.

Seven years ago, one third of the company’s revenue came from a stable of smaller skate hardgoods brands. Now, Globe and Impala account for only 10% of total revenue, Hill said.

The company’s key growth brands going forward including Salty Crew, workwear brand FXD, and swimwear brand It’s Now Cool, he said.

Outlook for January-June 2024

For the second half of Globe’s fiscal year which runs through June, the company expects all regions and key brands to remain profitable, Hill said.