Surfing e-tailer, Surfstitch, is expecting to double its losses and also announced the planned closure of its North American arm.
Citing the ‘difficult business environment for apparel and footwear’, particularly in the UK, Surfstitch now expects EBITDA loss to be in the range of $10.5m to $11.5m from the range of $5m to $6.5m previously advised to the market for the financial year.
“The work to transform our business model through improved operational capabilities, enriched customer engagement and a reduced cost base, is going well,” said Mike Sonand, CEO, Surfstitch.
“However, the retail environment has made it difficult to deliver the planned sales and gross margin improvements as quickly as we would like, resulting in the revised forecast for the group’s underlying EBITDA.”
Sonand said that the recent re-platform of the SurfStitch Australia business to a multi-brand and multi-region technology had been successful and will enable the company to develop more sophisticated techniques for consumer engagement.
“Our new platform in Australia is a responsive solution that materially improves functionality, reduces the cost of operating the site and will improve customer experience,” he said.
“Its core pillar is mobile first, which aligns with our strategy of optimising customer engagement.”
Surfstitch is also closing its US operations, announcing the transfer of the management of the Swell e-commerce platform from the US to Australia and the wind down and closure of its North American operational infrastructure by January 2018.
“Although, considerable progress has been made in arresting losses in North America, the region will continue to be unprofitable for the foreseeable future and so we have made the difficult decision to close our US operating infrastructure,” said Sonand.
“The new technology platform we have implemented in Australia will enable the Swell site to operate in North America whilst being serviced and managed by our teams in Australia.
“These measures will provide for a greater focus on our two largest markets, Australia and the UK, and will materially reduce our operating costs, while still maintaining a consumer presence in North America.”
The e-tailer’s strategy chairman, Sam Weiss said the company’s board was focused on delivering a business that is cash flow positive as soon as possible and maximising value for shareholders, including the consideration of the sale of some or all of the businesses assets.
“Notwithstanding the difficult business environment and the operational and external challenges facing SurfStitch, the board, the management and the global SurfStitch team are highly engaged and enthusiastic about the opportunity to deliver on the significant potential of our business.”
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