SRF Details
Cash position ahead of expectations: SurfStitch Group Ltd (ASX: SRF) reported its financial results for the six months ended 31 December 2016 entailing an $8.0 million improvement in the loss from continuing operations of $5.6 million, over the prior corresponding period (pcp) loss of $13.6 million. Another key highlight is the increase in the cash on hand to $33 million, which was above expectations, up from $21.4 million at 30 June 2016. This improvement was at the back of $12.2 million reduction in gross underlying inventory and receipt of $10 million on the completion of the sale of SHI in December 2016. There was also a slip in cost of doing business with a $4.8 million reduction in opex and capex spend over the pcp. Further, SRF expects to accelerate its savings efforts to deliver benefits into H2 FY17. However, the revenue slipped by 13.1% owing to appreciation of the AUD to GBP and a decline in sales in the North American market.
 

1H FY17 Result (Source: Company Reports)
 
Given the challenging environment for the retailers and headwinds in the last few weeks of December and into January and February, SRF revised its underlying EBITDA loss forecast from the previous range of ($4.0m) – ($5.0m) to an underlying EBITDA loss forecast range of ($5.0m) – ($6.5m). The group intends to manage cost to mitigate the impact of the difficult trading conditions and maintain a profitable business model. The stock has fallen 5.6% in last five days as on March 02, 2017.We maintain a “Hold” on the stock at the current price of $ 0.17


SRF Daily Chart (Source: Thomson Reuters)

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