Australian luxury goods maker Oroton group says its first quarter performance is in line with expectations.
Chief executive Sally Macdonald told shareholders at yesterday's AGM that luxury goods market was doing very well, with its Oroton and Polo Ralph Lauren brands, experiencing solid demand.
"The first quarter of 2008 has met expectations and has continued strong like-for-like sales performances in both brands," she said.
"Please bear in mind that historically Q1 has represented approximately only 10-15% of the year's total expected profits, so the year is still very much ahead of us."
Oroton earned a record net profit after tax of $9.8 million, up 22.6% over the previous year and reflecting a $19.2 million turnaround in performance from a loss in 2006. That was after significant restructuring, stock write-downs and a big change in strategy.
Ms Macdonald said the company was enjoying favourable conditions.
"It is a very good time for premium or luxury brands generally, and we are especially pleased with our performance in Polo concessions where we have regularly beaten local and international competitors with less than a quarter of the doors," she said.
"Whilst it is still early days of trading, this is the difference you can make as a focused retailer."
Ms Macdonald reiterated Oroton's strategy to sell its goods at full price and not to repeat the discounting of previous years.
"We will discount selectively in key promotional periods but we are retraining our customers to buy beautiful product at full price," she said.
"Since July year end we have also moved head office from the city to Waterloo (in southern Sydney) and are enjoying the benefits of a better working environment at a lower cost.
"On the IT and logistics/warehouse front there is much ongoing review and analysis to improve efficiency. We have changed freight forwarder recently, and are assessing a small investment in a merchandise planning system, to improve this core skill across both Oroton and Polo.
"On new stores specifically there are a further 2 new stores planned for Oroton towards the end of the financial year and we are exploring a number of store openings across both brands for the next financial year and beyond," she said
The new flagship Sydney CBD store opens in the Queen Victoria Building next week and the company is about to selectively introduce a new range of men's shirts.
Executive chairman Ross Lane did not attend the meeting in Sydney on Wednesday, due to a recent death in the family.
But independent director Sam Weiss delivered a personal message from Mr Lane to shareholders.
"It is terrific to be involved in the group today," Mr Lane said.
"Whilst my family and I sold a parcel of our shares earlier this month we remain long term committed shareholders and are extremely positive when we look at the group's future."
Orotongroup shares were untraded on $4.000.
Meanwhile another listed retailer, the food group, Allied Brands is looking at a sharp rise in 2008 earnings.
Shareholders in the company behind food outlets Baskin-Robbins and Cookie Man and the Kenny's Cardiology gift shop were told by CEO, Peter Graham told that net profit before tax for the 2008 financial year was forecast at $4.6 million.
This compared with $1.3 million in fiscal 2007. That result did not include results for Kenny's Cardiology, which was acquired recently.
Mr Graham said the company expects all three brands to show continued strong growth during the next financial year,
"Baskin-Robbins and Cookie Man will continue to develop site-sharing opportunities, whilst Kenny's Cardiology will embark on a growth strategy to develop stores in areas with currently low representation," he said.
He said Allied Brands is developing 27 news stores, which are all due to open in the next 12 months, and there are also plans to take Cookie Man further overseas after its success in India,.
"Cookie Man has recently announced an expansion plan to introduce the brand to at least three new countries as a result of enquiries received from potential countries who have observed the success of the Cookie Man brand in India," he said.
Allied Brands acquired Cookie Man in early March and Kenny's Cardiology in July.
The company is confident of achieving cost savings and synergies from combining parts of the three businesses and has centralised logistics at its premises in northern Sydney.
"There are a number of areas such as development, training, construction, finance and marketing where the three brands will be sharing resources," Mr Graham said.
He said a finance business will be developed, to accelerate growth by providing finance to franchisees.
Allied Brands shares (ABQ) finished steady on 51 cents yesterday.
