The chairman of Surfstitch is gone

Jason Finlay of New South Wales rides a wave during the 2016 Shark Island Challenge off South Cronulla Point in Sydney. Cameron Spencer/Getty Images

The first chairman of SurfStitch is stepping down as the troubled online clothing retailer restructures its management.

A short time ago, the company’s shares were up 2.7% to 19 cents, off a low of 18 cents but well below the 12 month high of $2.13.

Howard McDonald, who became chair when the company listed two years ago, is retiring at the end of this month.

“The last four months since the surprise departure of the former CEO (Justin Cameron) have been highly challenging for management,” he says.

However, he says the appointment of CEO Mike Sonand in May is having a very positive impact on the business.

The company’s management was restructured after the surprise departure of CEO and co-founder Justin Cameron in March. The company then said it understood Cameron was pursuing a potential acquisition of the business in conjunction with private equity.

McDonald is being replaced as chair by Sam Weiss who has a track record in technology, online retailing and digital marketing across global markets, as well as in corporate restructurings. He joined the SurfStitch board on July 1.

Weiss is chairman of Altium Limited, 3PLearning Limited and online retail marketplace Ensogo Limited.

SurfStitch has been downgrading its profit forecasts but expects to return to profitability and be cash-flow positive in 2017.

Last month the company forecast a full year EBITDA (earnings before interest, tax, depreciation and amortisation) loss of $17.3 million to $18.3 million when previously it had expected to be $2 million to $3 million ahead.

The company says 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, SurfStitch bought action and extreme sport video producer Garage Entertainment, a local Sydney company, for $15 million in cash and shares.

SurfStitch today also announced the appointment of Mike Sonand to the board as managing director.

Details of a strategic review of the business will be revealed at the 2016 results announcement at the end of August.

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