Tough times breeds tough action and so it was with the peripatetic surfwear company, Surfstitch and its at times dysfunctional board.
As a result of changes revealed yesterday in a statement to the ASX, the company’s board will be shrunk to just three members going into 2017 as the company tries to recover from a year of falling sales, weak revenue, vanishing profits and shareholder hostility.
Investors remain sceptical – the shares fell 3% yesterday to just 16 cents and the are down 94% over the past year, having hit an all time low of 10 cents earlier this year in the midst one of its sales and earnings crises.
Founder Lex Pederson, as well as Justin Stone, Stephen Goddard and Jane Huxley will all stand down from the board at the end of this month, less than three weeks after 31% of shareholders voted against the company’s remuneration report at the annual general meeting and gave the company a first ‘strike.’
That is a vote of 25% or more from shareholders against the remuneration report. A second strike at next year’s AGM would see the board spilled and a new team voted on by shareholders.
Yesterday’s statement from the company shows it has moved a year early and revealed its own ’spill’. As a result the changes will leave Surfstitch with just three board members, Mr Weiss, Mr Hodge and chief executive Mike Sonand going into next year.
Surfstitch chairman Samuel Weiss said Quiksilver Europe founder and former chairman Harry Hodge will join the board and the company will search for additional directors to replace those who departing.
Mr Pederson and Mr Stone will continue in their executive roles at the company.
The company reported a net loss of $155 million in 2015-16 after investing heavily in business changes and failing to achieve the strong sales growth it was budgeting on.
Surfstitch has also warned legal costs from its failed $55 million takeover bid for CoastalWatch and a content sharing deal with Crown Financial would make a hit this year’s results by up to $10 million from a previous estimate of up to $7 million.
Now it has to start generating sales and revenue growth that can convince sceptical investors that it has a future as an independent listed company.
