Surf retailer seen as "cautionary tale!"
Online retailer SurfStitch has become a business cautionary tale, having lost over 500 million dollars in a matter of months. Businessmen and business experts are sifting through the wreckage of a once sprawling empire trying to piece together exactly what happened.
And what did happen?
CelebrityNetWorth.com, the website future billionaires read everyday, tell us, maybe, in today’s piece “How surfing retailer SurfStitch lost $500 in just months.” Let’s read!
SurfStitch, an online market for surfers, action sports enthusiasts, and people who just want to look the part, is wiping out BIG time. The e-commerce company that was once “ripping it” on the stock market, has become a cautionary tale, by losing over $500 million in value, since November of last year.
When Australian surfer Lex Pedersen and investment banker Justin Cameron launched SurfStitch in 2008, they hoped to become the online hub for surfer products and culture. According to thecompany’s website, local shops lacked in range, style, and size of surfing equipment and clothes and there were only a handful of pure-play online retailers. SurfStitch aimed to become the pure-play online retailer of the surfing world.
The company grew quickly, expanding from Australia to Europe in 2011 and to North America in 2014. At the time of its IPO on the Australian Stock Exchange in 2014, the company was valued at $186 million.
In 2015, SurfStitch began amassing a series of businesses, retailers, and surfing content. It raised $37.5 million in new capital to buy Stab, a leading online surf content platform, and Magicseaweeed, a user-generated surf forecasting network, for $21 million. In November, it paid $15 million for a video production company and raised another $50 million to buy Surf Hardware International, a leading surfboard and accessories manufacturer.
In November 2015, SurfStitch was valued at around $580 million.
The quick growth and diversification of Surfstitch was a surprise to many shareholders, and that surprise quickly turned to concern. In early 2016, the online retailer backed away from its full-year earnings guidance, saying it wanted to invest in content to drive more expansion. In response to the risky move, the company’s shares dropped by almost 40 percent in February 2016.
Then, in early March, Cameron suddenly announced he was abandoning his position with the company and was considering a potential acquisition of the company, backed by private investors. The company’s shares shot up about 18 percent to $1.40, prompting investors to declare the private equity would need to pay $2 a share. But Cameron and his would-be investors seemingly vanished.
Although shares of SurfStitch stayed steady between $1.30 and $1.40 for a few months, the ride now seems to be over. In May, the company announced its profit for the 2016 financial year would plunge by about 60 percent, to about $2 million to $3 million. Shares responded, dropping by 61 percent. In June, shares took another hit, after SurfStitch’s new chief executive, Mike Sonand, announced another $18 million loss.
“The business has just tried to do too much,” Sonand said on Thursday. “Fundamentally it’s a great business, it just hasn’t been executed well and under my leadership it will do a lot better.”
While shareholders have expressed agreement with Sonand’s assessment, the company’s value continues to depreciate. Shares fell by 30 percent in June, plunging from $0.40 to $0.26. Last Thursday morning, SurfStitch’s value had dropped as low as $74 million – an over $500 million drop, since last November.
Although it’s always possible Sonand will help the online retailer get back on its board and paddle out, the last few months have left it pretty bruised and banged up. Right now, the company seems to be another chapter in the book of cautionary tales, that includes one-time tech giant Yahoo and revolutionary blood-testing company Theranos. They’ve taught us it rarely pays to shred the heavies.
But, wait, what on earth does “shredding the heavies” mean in business terms? I am so lost!
Stab was worth $37.5 million? I’m baffled.
This SurfStitch schadenfreude is getting very boring. Clearly your mate Derek is still pissed off about missing out his Stab millions, and you’re just along for the ride.
BG do need a new angle maybe. But Stab’s ongoing editorial advertising ( the FCS2 fin world domination, surfboard “reviews”, Modom etc)?? Someone should call them out, BG making fun of them will do fine
Gotta wait for those going out of biz sales
As I said, they don’t know what they are… And took lot of credit trying to figure it out… Apparently, they still can’t.
Any smart investor should have bailed on the first sight of such a nonsense business plan.
Seems Surfstitch lived and died by “Greed is Good motto” . If they had maybe concentrated on what they were good at!!! BUT was it anything good though, other than throwing up product from OTHER brands on an online platform!! Fuck not exactly a genius business model really.
If they bought Rossignol skis that would have been brilliant and surely worked
I’m actually suspicious maybe they’ve created the conditions for a cheap takeover. Interesting times ahead for ASX and ASIC
ah surfies and the stockmarket , has there been a success ever with a surf Co going public?
Stick the knife in, then twist
Most telling part of the news article was the “It was a great idea and business, but fuck me they’d struggle to run a meat tray raffle properly ” or whatever
Well if they get the coffey sisters butts trademarked they’d gain at least 2%
Morgan’s words are literally priceless (assuming zero is not a price).
Obviously this was coming, they bought so many companies in such a short time, I don’t know what the hell they were thinking.