SURFSTITCH: YOU AIN'T SEEN NOTHING YET
Written on the 11 November 2015 by Jenna Rathbone
ONLINE retailer SurfStitch is gearing up for a flurry of acquisitions as it aims to evolve as the Netflix or Amazon equivalent of the action sports industry.
Chair Howard McDonald, speaking at the company's first ever AGM, also reaffirmed its aim for double-digit revenue growth in FY16.
EBITDA is expected to be particularly strong, up to $18 million - a result that would be more than double FY15.
McDonald says although the Gold Coast-headquartered company is pleased with what it has achieved to date, SurfStitch is only part way through its story.
"The FY16 outlook is for strong double-digit revenue growth to continue in FY16 as the Group benefits from a full year's run rate of FY15 initiatives," says McDonald.
"EBITDA in particular is expected to have a stronger second half in FY16 as the rebranding and strategic plan gain further traction, with full year FY16 EBITDA ranging between $15-$18 million - a growth of 100 per cent.
Earlier this year SurfStitch acquired a surf forecaster site Magicseaweed and global online publisher Stab Magazine.
CEO Justin Cameron says to achieve double-digit growth the company will continue to roll out its global content strategy which aims to link every aspect of the surf and action sports lifestyle, from impression to purchase.
"Our global content strategy is delivering early signs of strong momentum and we expect that momentum to continue to elevate as we push further into that content driven network strategy," says Cameron.
"Progress is being made on negotiations with potential vendors on digital assets to complement our Stab and Magicseaweed investments.
"Brand partnerships and vertical product focus is also now a mid-term priority for the group as we look to further leverage the scale and benefits of our business globally."
Cameron says this strategy will help the group forge ahead as a leader in its field.
"SurfStitch plans to evolve to be the Netflix and Amazon of action sports," says Cameron.
"By leveraging subscription video on demand services from our brands and the content that we deliver through our Stab and Magicseaweed networks, through to our actions sports utilities and importantly the exclusive product and services we can offer through our network, we can provide what we see is the Amazon equivalent for the action sports content."
He adds that the company will continue to invest in mobile networks with 50 per cent of the group's revenue coming from mobile devices.
"As we look at our network of the future, we focus on customer-centric engagement with our consumer base we will be mobile first," he says.
Cameron says the past 12 months have proved challenging and exciting, with the company launching an IPO, separating from Billabong and Quiksilver and successfully completing capital raising and the acquisition of a number of companies.
"It has been a very exciting journey for us over the past eight years to be able to sit here today in our first AGM," says Cameron.
"(It has) obviously been a very eventful 12 months in going through the IPO process and being in a position (now) where we see ourselves as the global leader in action sports and (having) the opportunity to further elevate our business into the future around that category and niche."
In FY15 SurfStitch boosted revenue 30 per cent to $199.4 million and posted a $4.1 million net profit for the year to June 30.
Growth accelerated in all of the group's key regions with sales in the Asia-Pacific region surging the most significantly by 44 per cent to $82.9 million. In Europe sales rose 22 per cent to $87.3 million and in the US 17 per cent to $21.9 million
Today SurfStitch offers more than 700 brands internationally.
The company's shares are trading around $1.88, well above the December 2014 listing price of $1. SurfStitch has a market capitalisation of $455 million.
The company says no dividend is planned, with cash to be reinvested in growing the company.
Author: Jenna Rathbone
About: Jenna Rathbone is a Queensland-based journalist who writes on a range of issues including business and property affairs and social issues.Connect via: Twitter