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E-commerce

SurfStitch responds to ‘please explain’ from ASX

Embattled online retailer, SurfStitch, has responded to a query from the ASX concerning share trading earlier this month, prior to downgrading its profit forecast to a loss.

The ASX queried why SurfStitch’s share price dropped from 46 cents at the close of trading on June 2, to 40.5 cents at the close of trading on June 6 on above average trading volume.

On June 7, SurfStitch shares entered a trading halt and on June 9 the company told the market it was forecasting a $20 million loss, in place of a $2 million profit for FY16.

This morning SurfStitch responded, saying it did not know why the share trading in question had occurred.

“The company has not heard any rumours or seen any evidence that confidentiality in relation to the relevant information, of the company’s assessment of that information, had been lost. The company is not aware why the share trading occurred,” SurfStitch said.

The stock exchange also asked SurfStitch when it became aware of the issue with a licence contract which wiped $20 million from the company’s revenue.

SurfStitch said it became aware of the issue late on June 6 and requested a trading halt before the market opened the following morning because it needed time to clarify the issue.

“Over the course of the two days following the release of the trading halt, the company made further enquiries to determine whether it was, in fact, appropriate for the company to publish a further trading update,” SurfStitch said.

Law firm Gadens is considering launching a shareholder class action against the retailer, questioning if it has complied with its continuos disclosure obligations.

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