Shares hit record low; former department store CEO signs up to right the ship…
The online surf retailer SurfStitch has fed innumerable headlines this year, though not, necessarily, of the sort that would thrill its masters.
Let’s study a few:
Blood Feud: Surf Stitch vs SurfStitch.
Just in: SurfStitch shares collapse.
Oh shit: SurfStitch Trading Halted.
In a nutshell. Two surfers, one with a banking background, start an online surf store in 2007. They risk everything, mortgage their houses, work their asses off, get bought by Billabong in 2009, then buy it back, go public, buy Stab, Magic Seaweed, Garage Entertainment and FCS and build the dazzling company to a point where it’s worth more than half a billion dollars.
And then came the downward ride.
CEO and founder Justin Cameron quit. Profits were downgraded. Trading was halted.
And, today, in what appears, correctly or incorrectly, to the layman to be a long goodbye, SurfStitch announced a loss for 2016 of around $18 million, and the appointment of a new CEO from a non-surf background, a strategy that served Billabong and Quiksilver so well.
From The Australian today:
In March, co-founder and later CEO Mr Cameron stepped down and then in May the firm slashed expected earnings from $15m-$18m to just $2m-$3m, with its stock nosediving 60 per cent on the news.
Mr Cameron left to team up with private equity to make a potential takeover bid for the company but no bid has yet been sent to the SurfStitch board.
Mr Sonand, whose appointment will take immediate effect, has previously held senior roles at Myer, Globe International, Just Jeans and Pacific Brands, while more recently serving as chief operating officer of Charles Parsons Group.
“There are both major opportunities and challenges and one of my first priorities is to establish an operating and management framework that I believe will restore the business to a position of strength,” he said.
Chris Dixon and Frank: please email [email protected] from the address you'd like your BeachGrit login on.
Commented on Disqus? Log out, tap the Disqus button, and your old name and comments come back. The box is ours.
Your comments are still here. Every one of them.
Twelve years of BeachGrit comments came across from Disqus. Connect and we will show you how many are yours. We get your username, nothing else.
Connect Disqus to reveal.
“In a nutshell.. Work their arses off” what a crock of shit! Both born with silver spoons in their gobs and barely worked a day in the life. Who you humping Derek? The blonde or the brunette?
Yeah I always got the impression Mikey’s image was cooked up in Quiky’s PR dept. “Okay Mikey got the haircut (tick), here’s your bogan wheels (tick), now every time someone points a camera at you, raise your middle finger (tick)”.
ah but wait , will surfstitch buy Rosignol ?
But it still doesn’t make much sense. You could use the money to by ads on these same websites for much cheaper, plus you will not have to pay for the costs of running the platform yourself.
I can’t help to think that they tried (and failed) to build a surfing holding. And if that’s the case, they are more stupid than I assumed.
Absolutely agree Ice, they’ve diversified out of their core business & unless there is a very solid financial reason to do so it usually ends in disaster!
*Mike Sonard*
The question remains, will it rally? I have friends who are betting big that it will…
…true? What’s the buy, what’s the sell prices?
I’m a measly designer with no experience/knowledge in such things but I know brand proposition and I don’t see it with SurfStitch. Companies which sit on the fence and become middle of the road just don’t cut it anymore. They should either:
• Become really cheap and sell tat for nothing but lots of it.
• Becomes really exclusive and sell higher end surf brands for lots.
I don’t know though. I’m past it. I once brought a branded t-shirt 5 years ago and felt disgusted with myself instantly.
American or Australian dollars?
…oh Australian dollars! The Pacific shekel!
Okay cuz I’m not so good at the metric system.
As I have previously posted, the company appeared to be making a loss on its day-to-day trading operations. This view was supported today by the revelation they SRF booked a $20M licence fee (in addition to the mere sale of goods) into its FY16 revenue forecast. Removing the licence fee appears to result in a operating (trading) loss on the sale of goods. In 2015, SRF appeared to over-buy inventory resulting in $17.8M in negative operating cashflow (go to the 30/6/15 accounts and refer to the Cashflow Statement). Its 31/12/15 balance sheet has $11M more in inventory & $26M more in payables than at 30/6/15. At 31/12/15, it had no debt and $61M in cash reserves so it will probably survive in the near-term. SRF is just an retailer. In my opinion it should not trade on a PE ratio more than 15 (unless it can demonstrate a high future profit growth profile), which means it needs to earn $5M in annual profit after tax to justify its current 30 cent share price. I don’t know anything about its future growth profile that would warrant SRF trading on a higher PE ratio than 15. It appears the new CEO needs to sort out the day-to-day trading operations, particularly profit margin & inventory management. Very basic but crucial stuff for a retailer. It appears all is not lost, yet. An end of financial year sale may be on the cards to clear out excess old inventory. Note: I am not a financial advisor. This is just my amateur opinion.
holy fuck. My eyes glazed over but it looks so smart. You don’t surf do you? Surfers are dumbs.
Take.my.money.and.invest.
I have the same as WSL I.e. $3.76
Helloooo Caribbean and mai tais! I’ll be fat as biolos in no time. Yewwww
CliffsNotes summary. Fed like hogs for a bit. Greed fucked em over. Litigation overload.
Of most importance to readers… an Everything Must Go!!!! Sale on the near horizon
that there is the problem. there’s nothing worthwhile to buy. that is, unless you like looking like your uncle who moved to iowa to make his fortune.
Forget the useless crap like Modom leashes, Go Pros and $500 Rip Slave watches
There’s Surfboards. Wetsuits. Board covers. Stuff you use to, you know, like surf.
I’d love to know who’ll the administrator will be
Man he’ll be kitted up!
Hardcore kitted af. Word.
http://magicseaweed.com/new…
they are pushing these all of sudden, blindly. almost to the point where you could even sue magicseaweed for such recommendations?
My two cents, as an economist and financial advisor myself, based on your report, BG news and without reading into the financial statements:
They don´t really know what they are. In order to have a chance, they need to figure this out first.
Isn´t this the company that bought Stab and MSW? I wonder what those ventures have to do with selling boardshorts. I see no synergy whatsoever between the businesses.
http://www.smh.com.au/busin…