Surfstitch narrows half-year profit loss, North America sales plunge

By

Benjamin Fitzgerald

Published
Feb 28, 2017

Struggling multibrand retailer Surfstitch reported a narrower half-year profit loss on Tuesday, largely due to the impact of the $17 million sale of its loss-making Surf Hardware International (SHI) division in December.

The Australian online surf apparel retailer clocked an $8.3 million loss in the first-half period of 2017, narrowed from last year’s dismal $14.5m loss. The e-tailer said margins improved on the back of the sale of loss-making businesses, cost cutting, the minimisation of discounting and a reduction in its product range.

Around $10m of the revenue received from the sale of SHI was accounted for in the first-half result, with the remainder to left for the second half, it said in a press release.

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As for sales, total transactions fell 13% to $106.3 million, hurt by a weaker Australian dollar and a 30% decline in sales in North America. Post-Christmas revenues were also lacking, it said.

“SurfStitch Group experienced trading headwinds in the last few weeks of December and into January and February, similar to other retailers,” the company said.

“Cost control initiatives have mitigated some of the impact of these difficult trading conditions and will continue to be carefully managed to deliver on underlying EBITDA closer to the lower end of the updated forecast range.”

SurfStitch now expects to lose between $5 million and $6.5 million before interest, tax, depreciation and amortisation, compared with a previous forecast for losses between $4 million and $5 million. Last year, SurfStitch's underlying EBITDA loss was $18.8 million in 2016.