Oroton has announced one of its worst losses in decades, posting a staggering 514% loss to $14.25 million for the 2017 financial year, compared with its $3.4 million loss in 2016.
Oroton joins a list of retailers posting a downgrade in net profit for the 2017 financial year, stating it was consistent with its forecast reflecting the “soft” and “competitive retail environment” as well as adverse currency impacts, similar to what many other retailer’s financial statements have said.
The fashion and accessories retailer’s revenue plummeted 9.7% to $123.2 million as like-for-like sales at its upmarket store chains sunk by 6%, off track by $10 million, which it says was caused by a sales slump during key trading periods, including Boxing Day as well as mid-season and end-of-season sale periods.
Oroton also says the demise of its Gap stores largely contributed to its poor financial performance, which saw $8.9 million worth of costs linked with the termination of the franchise in Australia, as well as $2.3 million of non-cash fixed asset impairments in Gap.
The Group’s chief executive Ross Lane has described the retailer’s financial position as “unacceptable”, however, has not revealed any further comments following the results release on Friday.
In June this year, Oroton unveiled its position of looking for buyers. It currently has an equity value of $33 million, with major shareholder Will Vicars recently loaning the company $3 million and Westpac extending its $35 million debt facility till October 2018 – which gives the brand some leg room to either work on attracting a new buyer or get fresh new capital injected into it.
“Whilst the group continues to engage with interested parties in the process, there is no certainty this process will result in a proposal or transaction for Oroton Group,” said Lane said Friday.
The Group has also been trying to steer the brand towards a younger demographic, with its 30% acquisition in personalised accessories brand The Daily Edited (TDE) earlier this year, in hopes the partnership will open it to a younger market segment and accelerate its online offering further.
In March this year, Oroton severed ties with Australian actress Rose Bryne as its key ambassador, to pursue “younger influencers” as well as reduce costs confirming they would pay their pay new ambassadors a much lower fee. No new names have been released since dumping Byrne.
Lane confirmed that Oroton has seen a lift in sales and profit margin for the first eight weeks of the 2018 financial year compared to the 2017 financial year, while Gap is trading in alignment with the group’s exit plan, however , it is too early to make predictions for the full-year trading forecast.