Shares of the Australian surf lifestyle brand were down 8.9% in heavy trading late last week after the company backed off earlier guidance on fiscal ‘03 earnings. BBG closed at A$5.35 on Friday after three days of trading that saw over 10.4 million shares change hands.

In November, chairman Gary Pemberton said BBG would see fiscal year profits increase by 25% to around A$76 million. Some analysts were speculating earnings around A$80 million. On Thursday, CEO Derek ONeill said BBG now expects 20% to 25% growth in earnings.

The fiscal first half looked solid, with net profit in the six months ending December 31, 2002 rising 21% to $35 million. Sales were up 22% to $287.7 million.

Backlog through April is on target to hit the growth numbers, but May / June future orders could impact the annual growth projections by up to 300 bps.

Some fund managers were spooked by a possible erosion in margins of the core apparel business in the US.

“The Australian business was disappointing but the US and Europe – the two big growth markets – were quite strong,” said Deutsche Asset Management’s Karen Towle in an article in the local Sydney paper.

In the US, earnings gained 32% despite uncertainty over consumer spending, while Europe grew 45% YTD.

>>> Not sure of global implications here, but Billabong should benefit in the U.S. from the recently announced increase in 2003 store openings at Pacific Sunwear.