Oroton warns of 85 per cent drop in FY earnings
Oroton says it sees no end to the slide in its sales and expects underlying earnings before interest, taxes, depreciation, and amortisation (EBITDA) of about $2 million to $3 million, down from $12.9 million in 2015/16.
Its shares, which have come out of a two-day trading halt pending the announcement, were down 22.2 per cent to $1.05 soon after the open and by 1122 AEST were down 18.9 per cent at $1.095.
Oroton’s interim chief executive Ross Lane says competitive market conditions during the April mid-season sale are expected to continue during the more important end-of-season sale in June and July.
Third-quarter revenues are below management expectations, the company said, following a 10 per cent decline in first-half revenue and a 44 per cent fall in earnings to $3.9 million compared to the prior corresponding period.
Like-for-like store sales decreased eight per cent in the first half and were down two per cent during the first seven weeks of the third quarter.
“Notwithstanding this, given the recent retail market trends of poor April mid-season and January summer sales, and low consumer confidence, management consider it prudent to reassess the outlook for the full financial year,” Lane said in a statement to the ASX.
He said the significant fall in its earnings forecast reflects an expectation for lower sales volumes, a fall in the hedge buying rate due to foreign currency movements and increased losses from its apparel chain Gap.
Other factors contributing to the group’s revenue hit is its shift away from women’s apparel, shoes and lingerie and lower sales at its factory outlets.
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