Struggling handbag and accessories retailer Oroton was placed into voluntary administration on Thursday making it the country’s latest retail casualty.
Oroton has been placed into voluntary administration following a series of earnings downgrade blows and plummeting sales, which prompted a six-month strategic review of the business.
On Thursday morning it said that following the review process it failed to find a “viable solution” to keep the company afloat. The options the Oroton Board considered included privatisation, selling off its controlling stake or refinancing the business, however voluntary administration was the chosen path.
“We have made every effort to avoid taking this decision but have been unable to source a viable solution which could achieve a better outcome than voluntary administration,” Oroton’s interim chief executive Ross Lane said in an ASX statement.
“The board is disappointed that it has had to take this step after running such a comprehensive process. However, having carefully considered the options available to the company at the conclusion of its strategic review, it is apparent that voluntary administration is necessary to protect the Oroton business and the future of this iconic Australian brand.”
Oroton’s stores will continue to operate and employ staff on a “business-as-usual” basis, according to administrator Vaughan Strawbridge from Deloitte Restructuring Services, saying that it would focus on “continuing to operate the business” as it “seek a recapitalisation or sale of this iconic brand”.
“The flexibility of the voluntary administration process enhances the ability to further restructure Oroton Group in a manner which makes it possible to achieve the best possible outcome in these circumstances,” said Strawbridge. “Our ambition is that a stronger Oroton business will emerge from this process.”
Oroton operates 62 stores and 12 concessions in Australia, New Zealand and Malaysia, as well as it local online store and newly launched international e-commerce platform. The company which also employees 550 staff confirms there are no planned job losses and all gift cards presented by consumers will be honoured.
On Monday, the iconic Australian fashion retailer was put on a trading halt. The company’s value has fallen from $380 million in 2011, to just $18 million in 2017, while share value is at its all-time lowest since 1999 currently at 43.5 cents, compared with $9.30 in 2011 and $2.44 a year ago. The first meeting of the creditors will be held on Monday 11th December.