Wipeout: Struggling retailer Surfstitch tumbles into administration

BELEAGUERED online retailer Surfstitch has tumbled into administration, dramatically intensifying the pall over the group.

Surfstitch has tumbled into administration.

BELEAGUERED online retailer Surfstitch has tumbled into administration, dramatically intensifying the pall over the group.

In a statement to the stockmarket today, Surfstitch announced an administrator had been appointed to the group.

Surfstitch said the moved followed “several significant, external challenges”.

These challenges included two class actions, litigation and an investigation by the corporate watchdog, the Australian Securities and Investments Commission, the Gold Coast-based group said.

In a separate statement, FTI Consulting said it had been appointed administrator to Surfstitch.

All operating businesses continued to trade as usual, FTI and Surfstitch said.

“Customers will continue to receive their merchandise as usual and suppliers and employees will be paid in the ordinary course of business,” FTI said in its statement.

Surfstitch, founded by Lex Pedersen and Justin Cameron, floated in December 2014. Pic: Toby Zerna

The slide into administration comes less than three years after Surfstitch, founded by Lex Pedersen and Justin Cameron, floated on the Australian Securities Exchange.

FTI said it would provide “a high level update on the progress of the administration and strategy moving forward” at a creditors meeting next month.

The meeting is expected to be held on Tuesday, September 5.

Surfstitch chairman Sam Weiss said: “Today’s decision reflects the exceptional circumstances that have impacted the Surfstitch Group for well over a year”.

The appointment of administrations was “necessary as we seek to put the business on a sustainable footing”, Mr Weiss said.

Surfstitch chairman Sam Weiss says the company wants to get itself on a “sustainable footing”.

Shares in Surfstitch were put in a trading halt on May 24 then suspended from trade two days later after the group was sued by investors alleging it had failed to keep the market property performed about its performance.

They last traded at just 6.8c.

During its initial public offering, late in 2014, Surfstitch raised $83.2 million, valuing the company at more than $200 million.

Its value had slumped dramatically, to just $19 million, by the time its shares were suspended from trade this year.

In its statement, FTI said that Mr Weiss had advised that Surfstitch companies appointed administrators “reluctantly”.

This was “due to several significant external challenges including two class actions, protracted litigation and an ASIC investigation which have brought high levels of uncertainty impacting the companies’ trading position”, the statement said.

“The administrators have been appointed with the intention of preserving value for stakeholders in the business whilst recapitalisation options are pursued.”