Oroton poised for change

Australian accessory brand Oroton has reported strong growth for the 2012 full fiscal year, but has braced itself for a future fallout after losing the rights to Ralph Lauren.

Group revenue for the company increased 12.3 per cent to $184.7 million, with like-for-like sales also up nine per cent for the company, compared to seven per cent for the fiscal 2011 year.

Brand like-for-like sales also increased by nine per cent for Oroton and 10 per cent for Ralph Lauren, with earnings before interest and tax (EBIT) up 3.6 per cent to $37.8 million, and net profit up 0.5 per cent to $24.9 million.

Oroton online has grown by 60 per cent over the last 12 months and now represents approximately 10 per cent of total brand sales.

The company said Oroton apparel and shoe categories are also growing steadily, with results to date in Oroton’s Asia-based stores also on track.

According to Oroton group CEO Sally Macdonald, the Oroton Malaysian business is now also cash flow positive, with the company set to open four directly owned stores in fiscal year 2013 (including two Oroton stores in China), as well as pursing potential distribution partners for Oroton in other key markets.

However, as recently reported on ragtrader.com.au, the Oroton group lost the rights for Ralph Lauren Australasia earlier this year, and will no longer distribute the brand in Australasia next year.

Ralph Lauren Australasia accounts for 45 per cent of the Oroton group's sales and 35 per cent of net profits.

As a result, Macdonald said the company remains cautious about the coming year.

"We expect the 2013 financial year to be a year of transition for the group as we review our possible strategic options including acquisitions, partnerships, license agreements and capital management activities,” she said.

“With the expiration of the Ralph Lauren license on June 30, 2013 we expect some level of cost reductions and improvements in cash flow this year. Negotiations to ensure a smooth transition are continuing with Ralph Lauren Corporation. Market conditions remain tough and we approach the fiscal 2013 year with caution.”

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