SurfStitch chief Justin Cameron quits as bid looms
SurfStitch’s chairman is disappointed at how Justin Cameron quit ahead of a possible private equity bid.
SurfStitch chairman Howard McDonald has told of his personal disappointment over the manner of chief executive Justin Cameron’s resignation, saying the co-founder’s shock decision should have been delivered in person rather than via email.
Mr McDonald told The Australian he had asked Mr Cameron to reconsider, but was knocked back.
He was speaking after Mr Cameron announced he was quitting the online retailer to join forces with a private equity group, in preparation for a possible bid for the company.
Mr Cameron, who founded SurfStitch with Lex Pedersen on Sydney’s northern beaches in 2007, quit via email to Mr McDonald, saying his resignation from all positions was effective immediately.
The chairman today moved to quell speculation of an erupting civil war at SurfStitch and confirmed that co-founder Mr Pedersen, who is managing director and major shareholder, was fully committed to the company and was not leaving.
Mr McDonald said in his long experience in business it was “unusual’’ for a CEO to resign via email rather than in person, and he was disappointed with Mr Cameron’s actions.
“It is unusual, I got this email last night and obviously I knew Justin has been travelling, we have got a lot of business to integrate and some other ideas that are nearing fruition, so for all that to occur is unusual,’’ Mr McDonald told The Australian.
“I’m very disappointed in that and, yes, we have a number of options emerging as to how we handle it.”
He had asked Mr Cameron to reconsider his decision, but he had declined.
“I spoke to him obviously and asked him to reconsider, he is of the view it’s appropriate for him to do that,” said Mr McDonald, a former chairman of department store Myer and one-time CEO of clothing and apparel company Just Group.
Mr McDonald said Mr Pedersen, who runs the company’s Swell retail business in North America, and executive director Justin Stone, who runs its Surfdome business, were staying with the company.
Surfstitch, which floated in December 2014, sell clothes, footwear and accessories online, and operates a media business. The company has operations in Australia, the UK, North America, France and Japan, with 500 staff.
Mr Cameron’s shock decision, announced to the ASX this morning, sent SurfStitch shares up to
23.4 per cent higher before they settled back at 16 per cent up by 10.37am (AEDT).
They closed up 13 cents, or 11 per cent, to $1.315, valuing the company at $360 million.
“The company (SRF) understands Mr Cameron is pursuing an opportunity relating to a potential acquisition of the company in conjunction with private equity,” SurfStitch said in a statement.
It stressed it had not yet received any formal acquisition proposal and there was no certainty any approach may be forthcoming.
SurfStitch last month delivered a maiden profit of $5.7 million following a series of acquisitions, which helped boost sales by 40 per cent in the six months to December.
Mr Cameron said at the time that strong, double-digit revenue growth was expected to continue in the June half and gross margins were expected to remain strong.
However the online retailer’s shares plunged 34 per cent after it abandoned its full year profit guidance, citing heavy investments in digital content.
Surfstitch said today it has no further update to its interim results and “continues to pursue a number of exciting investment opportunities consistent with its global content strategy”.
Launched out of a Sydney garage, SurfStitch initially sold surfwear and gear sourced from third parties on eBay, opening its own retail website in 2008.
Fellow sportswear retailer Billabong International grabbed a 20 per cent stake in the company in late 2009, expanding that to 51 per cent by 2012 through a series of transactions including the joint launch of SurfStitch in Europe.
Messrs Cameron and Pedersen in August 2014 raised $65 million from a group of Australian and overseas investors, which allowed them to take control of the company and buy Billabong’s stake before listing late that year.
SurfStitch said since Mr Cameron had resigned within a fixed two-year period and before his contract allowed, it would assess its options with regard to the best interest of its shareholders.
Mr McDonald would oversee the day-to-day operations of the company, which is now based on the Gold Coast.
The company said it had hired UBS AG to act as its financial adviser and Herbert Smith Freehills as its legal adviser.
With Dow Jones, AAP
AAP, Dow Jones
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