The recent downfall of SurfStitch, an online retailer specializing in beach, outdoor, and action sports apparel, has unveiled a troubling narrative affecting multiple stakeholders. In May 2023, Best Markets Pty Ltd acquired the company. Soon after, it went into voluntary administration, with creditors left holding the proverbial sticky end of an estimated $15 million debt. Now suppliers and employees have begun speaking out against Alquemie Group’s mismanagement. This concern has likely arisen since the consortium purchased SurfStitch from Alceon in 2018.
SurfStitch’s problems worsened when supplier Tomy Zheng, owner of Jinjian Shengyi Fashion Weaving, began experiencing extreme payment late. These circumstances produced extraordinary challenges for the business. Zheng asserts that SurfStitch and Alquemie Group are liable to him in excess of $100,000. One payment is more than a year overdue – far surpassing the contracted term of 120 days post-shipment. Because of high costs and low revenues, Zheng has been forced to choose the hard path. He laid off 100 of his 120 employees, leaving himself with less than 30 workers.
Zheng’s wild claims aren’t even the biggest problem. In May, Nike Australia filed last-minute legal action against embattled SurfStitch, claiming SurfStitch owed the sporting giant $237,760.38. The Alquemie Group has been tanking financially, losing $2 million dollars in 2023 alone. This is a deep reversal from the $3.2 million profit they made last year. Taken together the string of revelations spell a dire state of financial affairs for SurfStitch and raise serious concerns about the management’s behavior.
Zheng expressed his frustration regarding the delayed payments, stating, “They kept making various excuses to delay the payments that were rightfully owed to us.” His sentiment is echoed across the industry by suppliers who have found themselves in similar predicaments with Alquemie Group. One former supplier noted the frustration of dealing with the company, stating, “They were bouncing me from person to person in their business. Just red-taping me.”
SurfStitch’s financial troubles reach further than Zheng and Nike Australia. The company is now under court actions from other creditors like Burton and SunnyLife for unpaid debts accumulated after abrupt cessation of business. Another one of its creditors includes Omnia Brands Pty Ltd, which is said to be owed more than $8 million. Richard Facioni is an executive director of SurfStitch, an online surfwear retailer. He is a director and secretary of Omni Brands Pty Ltd.
In response to these claims, an Alquemie Group spokesperson stood by their business practices. They remarked that “a very small number of suppliers have seen the current environment as an opportunity to pursue long-standing commercial disputes through the media with claims that are untested, unsubstantiated or simply untrue.” That assertion is an unsurprising part of the company’s strategy to minimize the legitimacy of the complaints its own suppliers have raised.
Zheng shared the emotional impact this ordeal has taken on him and his restaurant. He said that the fight seems never ending. “It’s really painful – we are still struggling and suffering, like being pricked by needles day after day,” he said. His story illustrates how corporate financial mismanagement can affect real people.
Over the past few months, Alquemie Group has pivoted their strategy. In order to survive, the company is now trading down to deeper scale brands. The spokesperson noted that “Alquemie Group’s approach of strategically focusing on larger scale brands is showing positive progress with several new stores opening in the coming six months.” More importantly, they pushed back against the narrative that these innovations would have never been possible without their landlord/supplier/customer support.
Yet SurfStitch’s tumultuous collapse sends a shockwave that echoes beyond the once-thriving privateer. It rattles the whole Australian retail ecosystem and risks putting a huge swath of our community—those that rely on it—out of work. Given all of these significant changes, stakeholders are watching closely as they try to feel their way through the deep fog that lies ahead.
