Retailer takes dive
alister.thomson@news.com.au running US eCommerce platform from Australia.
SurfStitch had forecast a FY17 pre-tax loss of $5 million to $6.5 million.
But, yesterday, it said a difficult retail market for footwear and apparel in its key markets, particularly Britain, has resulted in its forecast loss blowing out to between $10.5 million and $11.5 million.
Chief executive Mike Sonand said the company, which reported a first-half loss of $8.2 million, is making progress on a transformation through enhanced customer engagement and cost cutting. online Swell
“However, the retail environment has made it difficult to deliver the planned sales and gross margin improvements as quickly as we would like, resulting in the revised forecast,” he said.
Mr Sonand said it is rolling out a new eCommerce platform for SurfStitch.com that will enable a greater focus on its key markets of Australia and the UK while still servicing North America.
Mr Sonand said it has made progress in stemming losses at its US business.
But, he said, it made the decision to shut the operation because it cannot see a return to profit in the “foreseeable future”.
In the UK, the company said, its Surfdome business has faced strong margin and sales pressure.
SurfStitch chairman Sam Weiss said the company will consider the sale of some or all of its assets as it seeks to generate positive cashflow “as soon as possible”.
Its assets include digital surfing magazine Stab, another site called Magic Seaweed which provides condition forecasts, and an online library of adventure sports videos.
In December it sold surfboard-maker Surf Hardware International for $17 million.
The revised forecast follows a second class-action lawsuit launched by shareholders this month.
UK-based Vannin Capital has engaged Sydney law firm Quinn Emanuel Urquhart & Sullivan to file a $100-million class action against SurfStitch in the Queensland Supreme Court.
It comes after law firm Gadens last year said that it planned a $500 million class action, alleging SurfStitch failed to keep the market informed about its true financial position.