The turnaround of Billabong to a brand-led global company hit a bump, posting a half year loss of $1.6 million.
However, sales grew 7.6% to $561.9 million, net profit before tax was $2.1 million and second half earnings are looking better.
The December half was dragged down by a $6.9 million fall in earnings in the US, where a port strike early in calendar 2015 caused an excess of stock later in the year.
CEO Neil Fiske says margins will recover once inventories are back in line.
A short time ago, Billabong shares were up about 7% to $1.67.
“Europe continues to gain momentum and the Asia Pacific region has delivered a solid performance given currency pressures,” says Fiske.
The surf clothing group, founded on the Gold Coast in 1973, in August posted a full year after tax profit of $4.2 million, the first in four years.
Earnings in January and February are ahead of last year and the company expects the second half to benefit from the implementation of key initiatives.
Billabong competitor Quiksilver last year filed for bankruptcy.
Surfstitch, an Australian-based online surf wear retailer, this week posted a maiden profit of $5.7 million.