Retail, generally speaking, is no place for income investors, be it in America, Europe, Australia or all three at the same time. Revenues are simply too erratic, more susceptible to human desires than are cash flows supported by essential-service companies such as telecoms or fee-based outfits that run pipelines.

People obviously need clothing, but tastes change, particularly at the higher end or with particular “lifestyle” attire. And taking on significant debt to buy and build brick-and-mortar stores to establish better control on the distribution channel for the surfwear you manufacture is a risky move at a time when more and more people are using the Internet rather than trekking to the mall to collect their duds.

Billabong International Ltd (ASX: BBG, OTC: BLLAF, ADR: BLLAY), the Burleigh Heads, Queensland-based surf-style and extreme-sports manufacturer and distributor whose primary strategic venture of late was to add stores in the US, on the Continent and at home, closed above AUD4 as recently as Dec. 8.

Today (Thursday morning in Sydney, as of this writing) the shares are changing hands on the Australian Securities Exchange below AUD2, wounded late last week by distress signals from other retailers, now nearly sunk by its own 2011 profit warning.

The shares shed 44 percent Dec. 19 following management’s announcement of its reduced outlook for earnings before interest, taxation, depreciation and amortization (EBITDA) to AUD175 million from AUD220 million. Billabong’s AUD613 million of overall debt is more than three times EBITDA, high enough that creditors may seek steps to alleviate balance-sheet pressure but not so substantial that the company’s in any short- or medium-term jeopardy of liquidation.

But management provided some guidance about what it prefers to do to cope with these difficulties, noting in its discussion of the profit downgrade a new equity issue wasn’t among its top choices. It could sell off some of the brands it’s acquired during its effort to consolidate its distribution channel, but the only moves sufficient to generate enough cash to make an appreciable impact on the overall debt burden would obviate the entire strategy.

What can’t be ruled out is a dividend cut, even an outright “suspension.” We’ll know about that when Billabong delivers 2011 results on Feb. 17, 2012, and is scheduled to declare its “interim” dividend.

For 2011 the company paid AUD0.29 per share, an interim dividend of AUD0.16 declared Feb. 18 and paid Apr. 21 with an ex-date of Mar. 15 and a “final” dividend of AUD0.13 declared Aug. 19 and paid Oct. 21 with an ex-date of Sept. 19. That’s down about 20 percent from the AUD0.36 paid in 2010 and 34 percent from the AUD0.44 per share distributed in 2009.

Retail in Australia is suffering through a tough period, but Billabong is hurting specifically because its target demographic has moved on from its products, no longer willing to cough up premiums above similarly styled discounter-duds. It also stretched itself to thin, exacerbating the impact of its inability to keep up with changing tastes.

Billabong has attracted a few bids over the past couple days because it looks cheap. It’s yielding about 15 percent early Thursday in Australia, but at a price-to-book value of 0.4 the market clearly has little appreciation for its combination of brands and stores. It looks cheap because there’s not much value; the quest to regain status as a “youth brand” is simply too quixotic for income investors who are actually interested in building wealth, even at these levels.

Billabong’s story is similar to JB Hi-Fi Ltd’s (ASX: JBH, OTC: JBHIF), which we told in the December In Focus feature for Australian Edge. JB management pre-announced a similar downgrade last week, triggering a wave of selling in Australia’s retail sector that’s continued this week.

Outdoor clothing company Kathmandu Holdings Ltd (ASX: KMD, ADR: KTHDY)  followed JB and Billabong with a profit warning of its own, as signs are gathering that all types of cyclical companies with consumer and European exposure could be headed for forecast adjustments and earnings misses when the next round of numbers starts rolling in after the New Year.

Department store operator David Jones Ltd (ASX: DJS, ADR: DJNSY) has also been beaten up, but its demise has played out over the second half of 2011. DJs generates a lot of cash, but it has a significant debt burden that it must address, beginning next September with AUD129 million drawn on a credit line; that’s about 10 percent of a shrinking market cap.

The stock is currently yielding more than 10 percent, even after the 6.7 percent year-over-year reduction. DJs cut its final dividend from the 2010 level of AUD0.18 to AUD0.15, after boosting the fiscal 2011 interim dividend slightly. The cut in the final dividend was the first since 2002, following eight straight years of increases.

Billabong (down 51.6 percent), JB (down 22.9 percent), Kathmandu (down 30.3 percent) and DJs (down 9.8 percent) have all gotten crushed since last Thursday’s close of trading on the ASX, the day before JB Hi-Fi’s announcement. During the same timeframe Amalgamated Holdings Ltd (ASX: AHD, OTC: AMGHF) is off just 0.8 percent, roughly in line with the Standard & Poor’s/Australian Securities Exchange 200 Index.

Amalgamated has more than 1,000 movie screens in Australia, New Zealand and Germany. Although “the movies” has the reputation of a “recession-resistant” industry that dates to the Golden Age of Hollywood in the 1930s and ’40s, this perception is somewhat removed from reality. It’s true that movie-going represents a cheaper entertainment alternative during times of economic distress, but the most significant factor in box office numbers remains the quality of the product exhibited.

Making movies work as an investment is a matter of smoothing out box office revenue that can be as volatile as any Hollywood diva or director. We’ve done very well in AE’s sister letter Canadian Edge with movie theater operator Cinplex Inc (TSX: CGX, OTC: CGXPF), which has more than 1,000 screens in the Great White North. Cineplex has found ways to monetize its screens during non-peak movie attendance hours, such as offering space for corporate events, and has also been innovative in its approach to letting screen space for advertising.

It’s among the most technically advanced theater operators in the world, as it’s invested heavily in upgrading to 3D and IMAX capabilities, which promise higher-margin box office.

In other words, Cineplex has done everything it can to diversify its revenue mix within the reasonable confines of its basic mission, and it’s done it well. Movie-going is a cheaper alternative to attending professional sports matches, for example, but nevertheless providing a quality experience counts.

At the same time building in offsets to potential drags on box office is key to making movie-theater operation a worthwhile investment.

Sydney-based Amalgamated has managed to complement its movie business with hotel operations, a mix that establishes it as a global leisure services provider. Profit before tax for the first three months of fiscal 2012 (ended  was AUD45.7 million, an increase of 4.3 percent over the comparable period; ex items year-over-year growth was 10.2 percent, as German exhibition has rebounded sharply. Hotel operations have suffered amid the current economic uncertainty, as the main Thredbo ski resort saw a 16.8 percent year-over-year earnings decline.

During its annual general meeting in mid-October management, because of the uncertainty surrounding many of the world’s economies, declined to offer specific guidance for the remainder of fiscal 2012. Managing Director David Seargeant did point out, however, a strong film lineup on the horizon, improving conditions in Germany and a potential return to health for the hotel industry in noting that Amalgamated is “well positioned to continue to meet challenges.” During the three years that have come to mark the global financial crisis Amalgamated was able to expand market share, completing acquisitions totaling AUD211 million.

For fiscal 2011 the board declared a final dividend of AUD0.23 per share as well as a special dividend of AUD0.04 per share. The total annualized dividend of AUD0.41 per share was up 11 percent over fiscal 2010, the 10th straight year of dividend growth. Amalgamated has approximately AUD270 million of credit facilities maturing Jul. 10, 2012, on which, as of Jun. 30, 2011, AUD46.3 million was drawn. Management has begun negotiations for new credit facilities.

Amalgamated has proven itself a solid player in a retail sub-industry, capable of generating significant and consistent cash flow through all types of economic conditions. Over the past five years Amalgamated has generated a total return–share-price appreciation plus dividends–of more than 70 percent in US dollar terms.

Its current AUD0.37 per share annualized dividend is good for a yield of 6.5 percent.

The Roundup

The gap between America and the rest of the world is shrinking. But America is still at the top of the heap. With 2010 estimated gross domestic product of USD14.58 trillion, it’s the biggest single-country economy on the planet, still about as big as China, Japan and Germany, Nos. 2, 3 and 4 in the World Bank’s rankings.

So it’s encouraging that economic data continue to support the proposition that things are getting a little bit better, a little bit faster on this side of the Atlantic. The latest item to drive bulls wild, November existing home sales, did include a bit of the persistent “good news/bad news” character that’s defined this choppy economy and market for months. Although existing sales rose 4 percent to a 10-month high, the National Association of Realtors revised lower by an average of 14 percent sales figures going back to 2007.

On the whole, however, it’s hard to argue that things are worsening in the US. Both the Philadelphia and the New York manufacturing surveys surprised to the upside, and the six-month outlook for both also improved. Refinancings are up to a five-week high, demand for three-, 10- and 30-year US Treasuries was solid, and the rate of change in the Consumer Price Index was in line with expectations. Perhaps of greatest significance is the report that initial claims for unemployment insurance dropped to 366,000 last week, the lowest new filings since May 2008.

There remain two significant macroeconomic concerns that, along with the trajectory of US growth and the virtual shutdown of significant federal government functions heading into November’s elections, will shape markets in 2012: Europe and China.

The European Central Bank has now pumped about EUR489 billion into banks on the Continent through a loan program that will provide liquidity while the search for a total solution continues. European banks might provide a market for troubled sovereign bonds, but the ECB is stopping short of providing that sort of assistance. It’s the biggest yet in a series of short-term moves, but it’s still a short-term move.

Bond spreads have been trending down–falling for more than a week straight until the ECB announced its new loans–and measures of interbank stress eased a bit last week. Crucially, indexes measuring eurozone manufacturing and services activity unexpectedly rose to 47.9 in November from 47 in October.

Events in Europe–the 17-country eurozone is a USD12.15 trillion economy–will likely dictate market mood until a solution is hammered out for the region’s debt crisis, or until growth rebounds. Meanwhile, quieter-for-now debate is playing out over China’s direction.

Our in-house expert on the Middle Kingdom, Yiannis Mostrous, remains bullish on China, noting in his most recent discussion of the topic that 2012 is the Year of the Dragon, “an auspicious symbol of good fortune and power.”

Much has been made of deteriorating housing market fundamentals in key regions and the potential for wealth-destroying property-value declines, brought on by government efforts to rein in lending earlier in 2011. Property values could decline even further heading into 2012, but the broader economy should remain insulated; a collapse sufficient to threaten the Communist Party of China’s hold on power would, however, be met with every possible response.

We’re not there yet. In fact, the HSBC Flash China Purchasing Managers Index (PMI) rose to 49 in December from 47.7 in November. That’s still in “contraction” territory (a reading below 50), but it does indicate the impact of the government’s efforts to roll back its tightening efforts.

The HSBC Flash China PMI is based on 85 percent to 90 percent of total responses to HSBC’s PMI survey each month, and is issued about aweek before the final PMI reading. The final PMI reading for December is scheduled to be released Dec. 30.

The National Bureau of Statistics and the China Federation of Logistics and Purchasing (CFLP) are expected to release the official PMI data for December on Jan. 1, 2012. The CFLP’s PMI is based on a survey of purchasing managers in more than 820 companies in 20 industries.

Mr. Mostrous expects China’s GDP growth to register above 9 percent for 2011 and to be in the neighborhood of 8 percent for 2012, though he notes that “the global economic environment remains fragile.”

Here’s when each of our Portfolio Holdings is expected to go ex-dividend the next time. To collect the dividend, investors will have to be stockholders as of the “record date,” which is typically a couple days later. All dates shown are estimated.

Conservative Holdings

• AGL Energy Ltd (ASX: AGL, OTC: AGLNF, ADR: AGLNY)–Mar. 5, 2012
• APA Group (ASX: APA, OTC: APAJF)–Dec. 23, 2011
• Australia & New Zealand Banking Group Ltd (ASX: ANZ, OTC: ANEWF, ADR: ANZBY)–May 10, 2012
• Cardno Ltd (ASX: CDD, OTC: COLDF)–Mar. 7, 2012
• CSL Ltd (ASX: CSL, OTC: CMXHF, ADR: CMXHY)–Feb. 15, 2012
• Envestra Ltd (ASX: ENV, OTC: EVSRF)–Feb. 10, 2012
• M2 Telecommunications Group Ltd (ASX: MTU, OTC: )–Mar. 16, 2012
• Telstra Corp Ltd (ASX: TLS, OTC: TTRAF, ADR: TLSYY)–Feb. 9, 2012

Aggressive Holdings

• BHP Billiton Ltd (ASX: BHP, NYSE: BHP)–Feb. 17, 2012
• GrainCorp Ltd (ASX: GNC, OTC: GRCLF)–Jun. 15, 2012
• Mineral Resources Ltd (ASX: MIN, OTC: MALRF)–Mar. 12, 2012
• Newcrest Mining Ltd (ASX: NCM, OTC: NCMGF, ADR: NCMGY)–Feb. 11, 2012
• New Hope Corp Ltd (ASX: NHC, OTC: NHPEF)–Mar. 20, 2012
• Origin Energy Ltd (ASX: ORG, OTC: OGFGF, ADR: OGFGY)–Feb 24, 2012

Just as they pay dividends semi-annually, so do Australian companies report financials only semi-annually. That makes it doubly important to pay attention when the numbers do come out.

Companies typically announce earnings release dates a few weeks before revealing their numbers and making filings. As a result, the dates shown below are only expected reporting dates, which can vary several days or even weeks. Note that releases are classified as “interim”–which show how a company is doing at the halfway point in its fiscal year–and “final,” which is the fiscal year in full.

The notable exception here is ANZ, which actually does release quarterly earnings data. Approximate reporting dates for the company are Feb. 2, May 2, Aug. 18 and Nov. 2 (full year). Also, Newcrest Mining and Origin Energy issue a quarterly “Sales and Revenue Releases,” in addition to interim results. Newcrest even issues monthly updates.

Conservative Holdings

• AGL Energy Ltd (ASX: AGL, OTC: AGLNF, ADR: AGLNY)–Feb. 23 (interim), Aug. 24 (final)
• APA Group (ASX: APA, OTC: APAJF)–Feb. 22 (interim), Aug. 23 (final)
• Australia & New Zealand Banking Group Ltd (ASX: ANZ, OTC: ANEWF, ADR: ANZBY)–Feb. 2, May 2, Aug. 18, Nov. 2 (final)
• Cardno Ltd (ASX: CDD, OTC: COLDF)–Feb. 15 (interim), Aug. 15 (final)
• CSL Ltd (ASX: CSL, OTC: CMXHF, ADR: CMXHY)–Feb. 16 (interim), Aug. 16 (final)
• Envestra Ltd (ASX: ENV, OTC: EVSRF)–Feb. 23 (interim), Aug. 25 (final)
• M2 Telecommunications Group Ltd (ASX: MTU, OTC: )–Feb. 25 (interim), Aug. 30 (final)
• Telstra Corp Ltd (ASX: TLS, OTC: TTRAF, ADR: TLSYY)–Feb. 9 (interim), Aug. 10 (final)

Aggressive Holdings

• BHP Billiton Ltd (ASX: BHP, NYSE: BHP)– Feb. 8 (interim), Aug. 24 (final)
• GrainCorp Ltd (ASX: GNC, OTC: GRCLF)– May 26 (interim), Nov. 23 (final)
• Mineral Resources Ltd (ASX: MIN, OTC: MALRF)–Feb. 17 (interim), Aug. 17 (final)
• Newcrest Mining Ltd (ASX: NCM, OTC: NCMGF, ADR: NCMGY)– Feb. 9 (interim), Apr. 18 (qtr), Jul. 21 (qtr), Aug. 15 (final), Oct. 20 (qtr), monthly sales releases
• New Hope Corp Ltd (ASX: NHC, OTC: NHPEF)– Mar. 22 (interim), Sept. 20 (final)
• Origin Energy Ltd (ASX: ORG, OTC: OGFGF, ADR: OGFGY)– Feb. 22 (interim), Apr. 29, Aug. 22 (final), Nov. 2