Sluggish sales in its first quarter has seen Oroton’s revenue drop 10 per cent to $67.1m in the luxury brand’s first-half results.
The luxury retailer’s first-half profit slumped more than 50 per cent to $1.8 million.
Net profit for the six months to January 28 fell 52 per cent on the 10 per cent decline in revenue prompted by the luxury clothing retailer’s exit from discontinued categories, lower factory outlet sales, and a decline in sales at the GAP stores it also operates.
The company says trade had improved over the first seven weeks of the second half but was still down on the same period a year ago.
Group EBITDA was $5.0m (HY16 $8.9m) with the reduction on the same period last year “primarily due to the revenue decline and a $1.3m foreign currency impact, from a fall in the hedged buying rate, notwithstanding an improved gross margin percentage and expense reductions”.
Earnings per share declined to 4.5c vs 9.2c during the same period last year.
Mark Newman, CEO, Oroton Group said it was clearly a disappointing first half result to shareholders.
“Positive trade in the second quarter up to Christmas Day was outweighed by sluggish sales in the first quarter and the much publicised, highly discounted and soft retail market from Boxing Day onwards, where foot traffic to all stores, across all channels and both brands, was lower than last year,” he said.
“Also impacting the result, was lower revenue from the GAP stores as the brand cycled some strong LFL sales last year (HY16 +6.4 per cent) in a highly discounted apparel market, a cold Spring and a womens’ range that did not perform globally.”
“The part of the business that let us down in the first half was our factory outlet business in the Oroton brand.
“That was mainly because we didn’t have the right levels of inventory, there’s some operational issues there that we need to address.”
Oroton’s sales via its online channel represented approximately 12 per cent of sales.
The luxury retailer yesterday announced the “strategic investment” of approximately 30 per cent in fast growing, online lifestyle accessories business, The Daily Edited for $4.5m.
As a result of the investment, the Oroton board determined not to declare a dividend for the half, “believing that at the current time it is in the best interests of the Company and shareholders to allocate and preserve capital for this exciting growth initiative”.
