Oroton first-half profit slumps 50 per cent

LUXURY fashion retailer Oroton Group has had a “very disappointing” first half, with profit slumping more than 50 per cent.

Rose Byrne at the Oroton Boutique. Picture: Lisa Maree Williams/Getty Images

OROTON Group has scrapped its interim dividend after its 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 a 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.

“Clearly this is a very disappointing first-half result for the group,” said OrotonGroup chief executive Mark Newman.

“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.

“This trend continued through January and adversely impacted the group’s results.”

OrotonGroup has also purchased 30 per cent The Daily Edited, an Australian lifestyle accessories brand, for $4.5 million comprising $2.7 million cash and $1.8 million of OrotonGroup shares.

OrotonGroup will have the opportunity to raise its interest in TDE to a majority stake in future periods. The investment is expected to be immediately accretive with double-digit EPS accretion forecast for FY18.

The company said while it remained “cautious about the overall market”, its focus for the rest of the year would be on “continuing to grow the core Oroton first retail business, rejuvenating and balancing the important factory outlet business contribution, resetting the GAP brand and providing a strong support platform for The Daily Edited to enable it to continue on its strong growth trajectory”.

Originally published as Oroton first-half profit slumps 50 per cent