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A CLASS action mooted last year against Billabong International (ASX:BBG) has come a step closer after a statement of claim was filed in the Federal Court this week.
However, company executives are being shielded from the distraction by an internal team assigned to battle the lawsuit, allowing US-based CEO Neil Fiske to focus on reviving the fortunes of the global surfwear giant.
The move comes on the heels of further evidence that Fiske's turnaround strategy is paying dividends after the Billabong brand shot up in value by more than 50 per cent to $361 million over the past year.
Brand Finance, the company that measures the value of brands in the Australian market, says Billabong's recovery has been the success story of the year as the nation's top 100 brands collectively surged 8.6 per cent to $128 billion.
The good news, aided by Billabong's $25.7 million interim profit, its first in three years, has been tempered by the class action that has dogged Billabong for the past 12 months.
In March last year, law firm Slater & Gordon (ASX:SGH) announced it was preparing the class action on behalf of "hundreds" of Australian and international investors.
The lawsuit is targeting Billabong's profit forecast made in August 2011 for the 2012 financial year when Billabong said it would achieve strong earnings growth.
The board, then led by CEO Derek O'Neill, issued a profit downgrade a few months later causing a 50 per cent fall in Billabong's share price.
Billabong has vowed to defend the allegations, although there is no indication when a defence will be lodged with the Federal Court.
"Billabong wholly rejects and intends to vigorously defend the claim which focuses on market disclosures that occurred in 2011, nearly four years ago," says the company in a statement to the ASX.
The scope of the claim has not been detailed, with Billabong saying the applicants are seeking "declarations and unquantified damages".
The applicants are described as investors who bought Billabong shares or American Depository Receipts between February 18 and December 19 in 2011.
In order to maintain its focus on the turnaround strategy, a sub-committee of the board, led by Dr Sally Pitkin, has been assigned to handle the class action.
"The Billabong board and management team remain resolutely focused on the ongoing turnaround of the company's operations globally," Billabong says. "Billabong has established appropriate processes to defend this proceeding."
Company secretary Joanna Brand says she cannot comment further on the matter which is now before the courts.
Meanwhile, a Billabong spokesman says he is chuffed to have the company featured in the latest Brand Finance survey, adding that there are a number of accounting measures for brand value.
"While it is good to see this (Brand Finance) result, what matters most is how our core followers view Billabong," the spokesman says. "We're seeing social media followers and viewership of key events that we back soar, and the team Burleigh and beyond are doing an enormous amount of work to continue to build brands we've always believed in."
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