Struggling Gold Coast action sports retailer SurfStitch faces $100m pounding with new class action

GOLD Coast online retailer SurfStitch is facing a $100 million pounding.

Struggling online action sports retailer SurfStitch faces a fresh threat with $100 million class action looming.

GOLD Coast online retailer SurfStitch is facing a $100 million pounding.

The troubled surf and skatewear company is looking at its second class action from aggrieved shareholders who saw their shareholding smashed after a string of too-rapid acquisitions and a series of profit downgrades.

UK-based Vannin Capital, one of the world’s largest litigation funders, has engaged Sydney law firm Quinn Emanuel Urquhart & Sullivan to file a $100 million class action against SurfStitch in the Queensland Supreme Court.

The claim is believed to be the state’s first shareholder class action under the Supreme Court of Queensland’s new class action rules.

It is on behalf of shareholders who saw the value of their shares plummet by 85 per cent between August 2015 and June 2016.

About $500 million was slashed from Burleigh-based SurfStitch’s market capitalisation.

Quinn Emanuel partner and former Brisbane lawyer Damian Scattini said the matter should be filed this month.

He said the proposed action is on behalf of “hundreds” of aggrieved shareholders.

“They come from all over Australia but a lot are from southeast Queensland,” Mr Scattini said.

“Many of those affected are Gold Coasters who have done their dough.”

Mr Scattini said he believes the action will be resolved “pretty quickly”.

Vannin Capital director of investments, Pip Murphy, said the claim will allege that SurfStitch breached its disclosure obligations and engaged in misleading or deceptive conduct, in contravention of the Corporations Act and ASX Listing Rules.

It is the second planned class action against SurfStitch.

Rival law firm Gadens last year said it planned a $500 million class action against the company, alleging it failed to keep the market informed about its true financial position.

Glenn McGowan QC, who then said he had been “deluged” with calls from irate mum and dad investors, most from Queensland, some of whom had lost their life savings after investing in SurfStitch, said the proposed action is still proceeding.

A SurfStitch spokeswoman said “nothing has been lodged” and “the company is focused on ensuring the business runs as efficiently as possible.”

After three profit downgrades in 2016, three different chief executives and the exit of the majority of its board of directors, SurfStitch’s share price, which traded as high as $2.13 in November 2015, fell as low as 10¢ last year.

They closed yesterday 12.5 per cent higher at 13.5¢.