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SurfStitch lifts profit, scraps earnings forecast

Online sportswear retailer, SurfStitch, has announced a profit increase of $5.7 million following a string of acquisitions which helped boost its half year sales.

The online surfwear store and digital media company’s pro forma sales soared to $144.9 million, which represents a 40 per cent increase from the previous corresponding period. Gross profit margin increased to 48.3 per cent in the six months ending December from the 46.9 per cent in the previous corresponding period.

Co-founder and chief executive, Justin Cameron, said the company’s strong, double digit revenue growth was expected to continue in the June half and gross margins were expected to remain strong after rising 140 basis points to 48.3 per cent in the December half.

Cameron, however, did not reaffirm the company’s full-year EBITDA guidance.

“Given the pace of change and long-term opportunities presented to the business, management and board believe it is no longer prudent to focus on a defined EBITDA range,” Cameron said.

“Instead, EBITDA growth will be flexed based on investment around the global content strategy. Additional opportunities for growth exist through acquisitions to support the group’s strategy, however focus remains on internal content investment.”

Cameron said the acquisitions of Garage Entertainment and Production, which produces and digitally distributes action and extreme sports films; and Surf Hardware International, a global designer, marketer and distributor of water board sports products and accessories – have enabled them to create a “unique digital ecosystem.”

“Equipped with the ability to create the various forms of content that resonate with our community, we will be leveraging our position and accelerating investment in generating content through our platforms,” said Cameron.

No dividends are planned and cash will continue to be reinvested in growth opportunities, the company asserted in a statement.

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