Rough ride for Wet Dreams as clothing venture stalls

A DISMAL foray into the fashion market may force listed WA company Wet Dreams Limited to go full circle and return its efforts to the resource sector.

At this stage, directors of the resource-cum-surfware company are unsure of how they can turn things around.

Managing director Hamish Younger would not rule out selling the Margaret River surf gear factory and using the funds to acquire mining assets.

The Margaret River operation was bought from brothers Dave and Brad Turriff-Smith, who launched the business in 1993.

The sale of the Wet Dreams business also could threaten the sponsorship of the Wet Dreams Margaret River Surfing Classic.

“I think you will see us rolling something else into the shell,” Mr Younger said.

“It could be in mining or something else. We could be looking at something else to add value.”

It was a different story in August last year when Business News visited Wet Dreams. Media speculation at the time suggested that Wet Dreams could be the next Billabong.

The company had just undergone a major shakeout, resulting in a name change from North Star Limited to Wet Dreams Limited.

After less than a year in the Melbourne market, having raised about $1.7 million in a rights issue for the venture, the company closed its clothing division in late June.

Mr Younger said the clothing business could have provided the biggest upside because it had a greater customer base and was not reliant just on the surfing fraternity, but the timing had been bad for the company.

Only a month before closing the Melbourne clothing division, the directors of Wet Dreams were still optimistic that the clothing market could be a winner.

In mid May, Wet Dreams made an announcement that it had agreed to acquire Lithglow Pty Ltd – manufacturer and distributor of the “Xisle” brand of surf clothing and wetsuits. The

purchase also would have given Wet

Dreams nine retail outlets in Victoria.

The company was willing to put $1.8 million on the line for the purchase of Lithglow and planned to raise a further $6 million to expand the clothing business.

On May 30, the directors announced that the purchase was off due to a lack of support from shareholders.

Director Peter Rowe made public his decision to resign from the company just two days before Wet Dreams announced a complete withdrawal from the clothing market.

“The company believes that the current retail environment is not conducive to the successful development of a clothing brand for a reasonable outlay,” Mr Younger said in an Australian Stock Exchange announcement.

The directors are now assessing the future direction of the company, which could include bringing the company’s operations back to the resource sector.

Sales for the year are expected to be about $1 million, well short of Mr Younger’s expectations last year of $2 million.