SurfStitch: shares are down, losses are up
For almost a year SurfStitch shares have dwindled in the cellar hovering at 20 cents or less. All the while the company attempted to consolidate in the face of huge losses, however the good times are still a fair way off.
Last Friday SurfStitch shares reached a record low of 0.09 cents, while today the company announced it'll run at least $5 million further into the red this year. They'd already forecast a loss of between $5 million and $6.5 million but that figure is now between $10.5 million and $11.5 million.
"Intense margin and sales pressure" is one of the reasons the company has given. On the back of the news, they also announced they would be closing their North American operations.
In April SurfStitch sold Garage Entertainment for a loss. That sale and the closure of the North American operation would appear to spell the end of their content-to-sales masterplan.
In 2015 they went on a splurge acquiring entertainment, hardgoods, and media busineses with the aim of structuring a new online business model. However, none of that has come to fruition. The business has been in turmoil since co-founder and chief Justin Cameron mysteriously quit the business last March to weigh up a privitisation bid.
It crashed to a $154.7 million full-year loss in August last year after three profit warnings.
SurfStitch also has seven court cases pending. Five with CoastalCOMS over a failed content sharing agreement, and two class actions.
The company's shares dived more than 22 per cent, hitting a record intraday low of 7¢. They were trading at 7.6¢ at midday.
Comments
The end is near. Don't believe they can come back from this. 7 cents is better than no cents.
Bought shares a while back and about the only good thing to come from that has been the 20% (now 15%) shareholder discount card which I've used heaps with online purchases.
Sorry but I can't resist the opportunity to be the decimal point police....just this once..,
7 cents not 0.07cents
Shane, is that 15% discount after the original discount than also after the promotion discount? I think I understand why Houston has a problem...!
Yeah discount after original discount....but you can't then get the promotional free gift with a a spend over a certain amount...one or the other from memory. But when it was 20% discount it was a decent saving for example on a set of FCS fins. And I found the delivery times were amazing. I'm in WA and last purchase was set of FCS2 fins...ordered from home on a Wednesday night and delivered to office desk mid-morning on the Friday...hard to argue with that.
Delivery from Surfstitch is great, I've purchased and it has been delivered in 24 hours (though I do live on the east coast).
I'm more concerned about Surfstitch doing discounts on there discounts, which may be part of the issue with there profitability. I'm not a direct shareholder (and I doubt I'm not an indirect shareholder). Great for the purchaser, and primarily items on sale are end of season. But when you get 30% off, then another 30% off again with a promotion, a $100 original price item becomes $49. Add free postage for combined purchases over a certain amount, then operational costs etc., the profit margin must be pretty skinny.
Well a sale item at $49 plus free postage and then their overheads = no profit as their accounts are now showing.
Surfstitch will simply run out of cash and disappear - surf shops are going to be happy about this result......unless Amazon thinks they will sell surf stuff.
Over60yrs... correct. I think SS will fold or move of the ASX (bought out and delisted), but another online player always emerges...
Breaking news - they've just been hit with a $100 million class action.
http://www.smh.com.au/business/retail/surfstitch-faces-100m-class-action...
shock horror , a surd Co that failed going public , which means , still not a single surf Co has been successful on the Stock exchange , thankfully Surfstitch have kept a perfect score , well perfect!
Surfstitch shares are now in a trading halt pending an update to ASX (probably Friday morning).
Times are changing in the rag trade, as kids are just hanging around in their onezies playing on their ipads.
Apparently, the whole retail industry is going thru major changes. Many issues for the likes of Myers, David Jones (being before privatised). The Amazon intro will be interesting.
Wow.
"Struggling surfwear retailer SurfStitch has taken the highly unusual step of calling for a suspension in the trading of its shares until the end of August."
http://www.theaustralian.com.au/business/markets/surfstitch-suspends-sha...
So what does that mean? Where to now for them and what about shareholders that want to offload their shares? Pretty odd way to operate!
Couple of interesting developments in the last day or so.
Firstly, yesterday afternoon Crown Financial (majority shareholder in SurfStitch) "called for an extraordinary general meeting to vote on the removal of chairman Sam Weiss".
http://www.news.com.au/finance/business/breaking-news/surfstitch-shareholder-wants-chair-removed/news-story/62e1dfd3e14a502a4b3bce367360804b
And today, Gadens law firm - who almost twelve months to the day issued a press release stating a possible Class Action against SurfStitch (see here) - have today contacted SurfStitch directly, "threatening to commence a further open class action against the Company, apparently on the same basis as the class action already commenced against the Company".
SurfStitch have issued a press release to that end, via the ASX (see here).
What a mess.
Another day, another exciting development. Fascinating reading from the AFR in the last 24 hours if you've been following the story from the start.
"SurfStitch's spurned suitor turns up the heat"
and..
"Whatever the amount, SurfStitch class action will settle: they all do"
From the second article:
"Almost two decades since Australia's first securities class action lawsuit – none of the more than 50 claims brought have made it to judgment."
Also, SurfStitch have responded to Crown Financial's "open" letter via an ASX press release (here).