Shares in local luxury accessories retailer OrotonGroup (ORL) soared 15% yesterday after the company produced a better than expected full year result, with the promise of another solid 12 months to come.
The shares jumped a massive 55c early on (on a day when the market traded weakly) to end at $4.10, up 12.3%, a rise of 45 cents.
In some respects the result from Oroton resembles the one from Premier Investments (PMV) on Wednesday with both receiving a high rating from investors at a time of rising market volatility and weakness.
That’s in marked contrast to the weak reports from Myer (MYR) and the subsequent sell off, and the tepid receptions for results from The Reject Shop (TRS), Woolies (WOW) and Wesfarmers (WES) (Coles, Target, etc).
Oroton yesterday reported a 15.6% increase in underlying net profit to $8.26 million as it adjusts to life after the 2013 loss of its Polo Ralph Lauren distribution licence.
Oroton’s sales from continuing operations rose 26% to $124.9 million in the year to July 26, a result underpinned by rebounding sales at the core Oroton business.
Like for like sales rose by a healthy 8% over the year.
The company said EBIT from continuing operations rose 11.7% to $13.2 million, in line with Oroton’s guidance and market forecasts.
(The adjusted figures reflect the loss in July 2013 of Oroton’s distribution licence for Polo Ralph Lauren, which accounted for about half the company’s earnings.)
With the loss of the Lauren business, Oroton naturally cut its final dividend to 8c from 20c a share, taking the full-year payout to 16c compared with 50c in 2013.
ORL YTD – Oroton bags strong growth
New managing director Mark Newman 2014 marked “the beginning of a period of transformational investment for the group as we completed our first year of the post-Ralph Lauren era and successfully integrated the GAP brand from November 2013 and launched our Brooks Brothers joint venture in February 2014”.
Gap and Brooks Brothers are two international labels Oroton will try and build to replace the Ralph Lauren revenues and earnings.
“Our strategy to elevate the Oroton brand has commenced with the announcement of the internationally acclaimed Australian actress, Rose Byrne as the celebrity face of the brand and the roll out of our new store concept, showcased at the successful reopening of our flagship store at the Queen Victoria Building, Sydney and a new store at the Emporium, Melbourne in August 2014,” Mr Newman said.
"Oroton online is a significant channel for the brand at ~10% of sales. Oroton International had a further year of growth with strong double digit L4L sales. We continued to invest in our international business with new stores opened in China, department store concessions in Singapore and a franchised store in Dubai. We also closed one underperforming store in Singapore at lease expiry taking our total international store portfolio to 11.
"Three GAP stores were integrated into the Group from November 2013 with encouraging positive L4L(4) sales across all stores driven by season relevant product in store and global price harmonisation,” he said.
The Group had 84 stores trading at the end of the 2013-14 year – 71 Oroton stores, 3 GAP stores and 10 Brooks Brothers stores.
