Luxury retailer Oroton is the latest retailer to admit to weakening profits as a result of low consumer sentiment, increased competition and losing its flagship Ralph Lauren licence.
The retailer expects to report earnings before interest and tax (EBIT) for the 2012-13 financial year to be $40 million.
“Overall trading in the Oroton brand in Australia has been softer than expected in the second half of FY13 in what continues to be a challenging and discounted retail market,” the company reported.
Oroton Group’s license agreement with Ralph Lauren Corporation (RLC) expired on 30 June 2013. As a result of this, RLC has now purchased inventory and store assets, employed all retail store team members and taken over all store lease, concession and wholesale obligations from July 1, 2013.
As the Ralph Lauren brand moved out of Oroton, it recorded a spike in sales and so it’s expected to achieve a materially greater portion of Oroton Group profits in FY13 than FY12.
Oroton also said while its FY14 earnings expectations will naturally depend on the timing and size of new licensed brand opportunities and/or acquisitions, it expects EBIT will likely be in the range of $23 million and $25 million.
“This investment in group capability has been a helpful asset in our recent discussions with future potential partners along with our 23 years of experience in developing the Ralph Lauren brand in Australia and New Zealand,” the company said.
“Discussions are well progressed and the company is confident that it will confirm some promising opportunities over the next three to six months.”
Meanwhile, the company’s presence overseas continues to grow. The first Oroton brand store in mainland China will open in Shanghai by September 2013 and two further new stores in Hong Kong and Dubai will follow before Christmas this year.