Global surf monopoly SurfStich looks to be so far up the proverbial creek that it is considering selling off two of its biggest media assets; Stab and Magicseaweed.
Over the past year the company has been embroiled in a series of shareholder brought legal and class actions and an investigation by ASIC (Australian Securities and Investments Commission) which have made a serious dent in its finances, with potential damages from the various lawsuits reported to be as high as $100 million – which is $81 million more than the market value of their outstanding shares. Basically, they’re in serious shit.
“The cost and disruption of the Crown Financial litigation, the Queensland and NSW Actions and the ASIC investigation continue to affect the listed entity and impact its cash position,” the company said in a recent market update.
“This does not prevent the ability of the key underlying retail businesses to trade and remain viable.
“The current board and management inherited a business that was in need of a turnaround, with loss making businesses and operational challenges.
Now their dreams of global surf industry domination seem to be crumbling
“Notwithstanding these legacy issues, the company is working steadily to stem losses within the business, improve the key underlying retail business operations and deal with the litigation challenges in an orderly fashion.”
SurfStich went on a purchasing spree back in 2014, buying up Surfdome, Swell, Garage Entertainment, Surf Hardware International (who own FCS), Magicseaweed and Stab over the course of a two year period.
But now their dreams of global surf industry domination seem to be crumbling. They’ve since sold Garage Entertainment and Surf Hardware International at a loss and earlier this year announced massive general losses of between $10.5 million and $11.5m, singling out the companies UK operations in particular, which they said had been struggling in an environment of “very intense margin and sales pressure.”
And now it looks like Stab and Magicseaweed could be the next of the company’s assets up for auction, telling its board of investors that “In the light of the challenges facing the business, the company is exploring sales of its media assets and the potential for sales of other assets.”
The saga continues.