Australian online retailer SurfStitch has announced plans to cease operations in North America as the company continues to deteriorate across all of its key markets.
As a result of the poor performance in international markets, particularly the UK, the company has updated the forecast for underlying EBITDA loss for FY 2017 to a range of $10.5m to $11.5m from the range of $5m to $6.5m.
CEO Mike Sonand said that while the plans to enhance and redevelop Surfstitch's business model were progressing well, the retail environment was limiting sales success.
‘’The work to transform our business model; through improved operational capabilities, enriched customer engagement and a reduced cost base, is going well .
"However, the retail environment has made it difficult to deliver the planned sales and gross margin improvements as quickly as we would like, resulting in the revised forecast for the Group’s underlying EBITDA.”
Surfstitch will now shift focus back onto the Australian market, winding down US operations by January 2018. The site will still service the US market, however all jobs, as well as the SWELL site, will be managed in Australia.
Sonand said that even though the company had managed to stem the losses in the market it sees little opportunity for profit in the future.
“Although, considerable progress has been made in arresting losses in North America, the region will continue to be unprofitable for the foreseeable future and so we have made the difficult decision to close our US operating infrastructure."
Moving forward, Surfstitch chairman Sam Weiss has stated the company will focus on two key strategic aims, delivering cash flow as soon as possible and considering the sale of some the businesses' assets.
“Notwithstanding the difficult business environment and the operational and external challenges facing SurfStitch, the board, the management and the global SurfStitch team are highly engaged and enthusiastic about the opportunity to deliver on the significant potential of our business.”
The company has also stated that redevelopment of its eCommerce platform will provide the business with greater opportunities within the market, particularly around customer engagement.