Worse-than-expected future for SurfStitch: FY17 loss doubles

Australian online fashion retailer SurfStitch advanced Monday that bigger losses are ahead as it has seen its online sales decline.

The company is now forecasting an underlying EBITDA loss for the full year of between 10.5 million Australian dollars to 11.5 million Australian dollars, doubling its previous loss forecast for a range of 5 - 6.5 million Australian dollars.

“The work to transform our business model — through improved operational capabilities, enriched customer engagement and a reduced cost base — is going well,” said CEO Mike Sonand in a market update.

Sonand added how “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.”

It’s worth recalling that clothing retailers in Australia have been under pressure from emerging competitors online and weak market conditions.

On a positive note, Sonand highlighted that the company has made substantial progress in to cutting costs, streamlining operations and transfer its core SurfStitch.com website to a new platform. “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 noted, adding that “Its core pillar is ‘mobile first’ which aligns with our strategy of optimising customer engagement.”

In February, SurfStitch posted a half year loss of 5.6 million Australian dollars, while revenue was down 13.1 percent to 106.30 million Australian dollars.

Surfstitch’s management was restructured after the surprise departure of CEO and co-founder Justin Cameron in March last year. The company then said it understood Cameron was pursuing a potential acquisition of the business in conjunction with private equity. There has been no news since, notes ‘Business Insider Australia’.