Surfstitch shares have been placed in a trading halt while the online sports apparel retailer assesses a $100 million shareholder class action alleging it failed to disclose the true state of its finances.
The company on Wednesday confirmed it had received a statement of claim filed in Queensland's Supreme Court and that it had requested its shares be placed in a halt possibly until Friday while it looks it over.
Law firm Quinn Emanuel claims that SurfStitch failed to tell shareholders it was trading at a loss and then tried to cover it up.
Quinn Emanuel said Surfstitch should never have made or repeated its 2015/16 earnings guidance of $15 million to $18 million.
Underlying earnings before interest, tax, depreciation and amortisation for the period - which excluded share based payments, acquisition-related costs and impairment charges - announced in August 2016 turned out to be a loss of $18.8 million.
The company's shares have tumbled in value amid a series of guidance downgrades.
Surfstitch shares closed at an all-time low of 6.8 cents on Tuesday - down 97 per cent from a high of $2.13 in November 2015 - after the firm on Monday again downgraded its earnings guidance, said it will close its US office and expects its full-year loss to double.
Backed by litigation funder Vannin Capital, the class action is open to anyone who purchased or held shares between August 27, 2015 and June 8 last year.
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