Surfstitch widens full year profit loss
Surfstich’s full-year net loss has widened by over 200% to $155.3 million, marking a year of acquisitions and the departure of co-founder and chief executive Justin Cameron.
The Australian company, however reported revenue gains of 143% to $237.9 million in the 12 months to June 30. Retail sales saw a 7% increase (three per cent in constant currency terms) pushed on by the European market. Underlying earnings before interest, tax, depreciation and amortisation, excluding share based payments, acquisition related costs and impairment charges, saw a loss of $18.8 million for the company.
As part of the ongoing strategic review of the company’s assets, business units and other investments, the retailer booked a non-cash impairment of goodwill, intangibles, plant, property and equipment and aged inventory totalling $99.3 million. The impact of these impairments was reflected in the statutory EBITDA loss for the period of $139.1 million.
“The results are clearly very disappointing,” said Mike Sonand, Surfstitch CEO. “The Surfstitch Group is fundamentally a great business, but the company has been through a period of rapid expansion, which has involved significant management time in effecting the relevant acquisitions and two major capital raisings."
Looking ahead, the company will implement a new executive team, restructure its North American operations, reducie the workforce by over 65%, reduce the UK workforce by 25%, and accelerate a brand rationalisation program, Sonand said.
For FY17, the company is forecasting single digit sales growth and an underlying EBITDA loss of $2 million to $3 million representing an improvement on FY16 EBITDA loss. Cash from operations is forecast to decline by $6 million to $7 million for the year, a reflection of the underlying loss and planned capital investments, the firm said.
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