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SURFSTITCH (ASX:SRF) has reduced its losses in the first half of FY17 as new CEO Mike Sonand executed his turnaround strategy.
In his first full half in charge of the Gold Coast-based action sports electronic retailer, Sonand reduced losses from continuing operations to $5.6 million, compared to $13.6 million the previous corresponding period.
Revenue was $106.3 million (from $122.4 million), Gross profit was $47.6 million (from $48.5 million) and results from operating activities improved from a $17 million loss to a $7.7 million loss, largely due to reduced selling and distribution expenses.
CEO Mike Sonand says the business and its staff worked hard on delivering objectives set at the beginning of the financial year to stabilise and refocus the business.
"It is pleasing to see that their commitment and efforts are paying off by delivering meaningful improvements in performance," says Sonand, adding that a solid base is being built for the business.
"We have made good progress in containing fixed and variable costs," says Sonand.
"We do also understand that to improve sales and margins we must appropriately resource the right areas of our business.
"That means prudently investing in both our business intelligence and data analytic capabilities, as well as building our vertical product team. These initiatives will drive future sales and margins and therefore profitability."
Sonand says the group, which decreased gross inventory by $12.4 million during the half year, has far stronger trading and buying discipline across the all businesses.
The company has experienced improvement in key retail metrics, and its cash position is ahead of expectations at $33 million.
"No doubt we have a far more solid foundation on which to operate the business than we did at the start of the financial year," says Sonand.
SurfStitch revised down its guidance because December sales fell well short of the previous year and the subdued retail environment extended into January and February.
The company is expecting an EBITDA loss of between $5 million and $6.5 million for the full year.
Another aspect that hurt SurfStitch was the 20 per cent depreciation of the Australian Dollar against the Great Britain Pound, which pushed the Europe section of the group to a loss.
SurfStitch is trading up 2.78 per cent at $0.185 per share at 11:14am AEDT this morning.
Business News Australia
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