The troubled online clothing retailer SurfStitch plans to cut up to 40 staff from its business in the US.
A short time ago, SurfStitch shares were up more than 10% to $0.26 on the news.
“This was not an easy decision to make, but we need to remain competitive in an extremely challenging North American environment, that has been particularly impacted by margin compression,” says CEO Mike Sonand.
The cuts will be made through both voluntary and involuntary redundancies.
SurfStitch shares have been on a slide after a series of profit warnings and the surprise departure of its CEO and cofounder Justin Cameron in March.
The online clothing retailer now expects a full year EBITDA (earnings before interest, tax, depreciation and amortisation) loss of between $17.3 million and $18.3 million when previously it had expected to be $2 million to $3 million ahead.
The company is working on a return to profitability and to be cash-flow positive in 2017.
Sonand, a veteran retailer, was appointed CEO last week. His previous roles include COO of the Charles Parsons Group and CEO of M Webster Holdings and Globe International.
The company in May said the integration of companies acquired over the last year has been slower than anticipated and the benefits lower than expected.
In May last year, the retailer bought a surf weather site, Magicseaweed, and a global online news magazine, Stab Magazine, for $13.8 million cash and 4.8 million shares.
In November, the company bought action and extreme sport video producer Garage Entertainment, a local Sydney company, for $15 million in cash and shares.
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