SurfStitch shares have dived to a one-year low after the online surfwear retailer dumped its full year earnings forecast.
The digital media and sportswear company’s shares dropped by more than a third after it didn’t reaffirm its underlying earnings guidance of between $15 million and $18 million for fiscal 2016.
Surfstitch shares dived 59 cents, or 34 per cent, to $1.14, their lowest point since February 2015.
Last August, Surfstitch was confident it could double full year earnings before interest, tax depreciation and amortisation in 2015/16 – and repeated that forecast at its annual general meeting for shareholders in November.
But on Thursday as it reported its first half results, Surfstitch said it was no longer prudent to focus on a defined forecast, citing its big investments in digital content.
“Instead, EBITDA growth will be flexed based on investment around the global content strategy,” SurfStitch said.
However chief executive Justin Cameron said strong double digit revenue growth and gross profit margins are expected to continue in the second half.
“(And) the increased investment in content in the next six to 12 months will benefit margins in the next 12 to 18 months,” he said.
SurfStitch has made a string of acquisitions recently, including global water board sports distributor Surf Hardware International.
It plans to emulate Amazon Prime, with a subscription-based offering of online movies and action sports streaming.
SurfStitch swung back to into the black in the half year to December 31, with a net profit of $368,000. It had reported a $5.6 million a year ago.
The Sydney-based company had double digit revenue growth in all regions, including Asia, Europe and north America.
SurfStitch debuted on the Australian share market in December 2014 after separating from Billabong and Quiksilver.
SURFSTITCH ABANDONS GUIDANCE
* Statutory net profit of $368,000 from a loss of $5.6m
* Revenue rises to $144.9m from $11.4m
* No interim dividend declared.