Oroton (ORL) shares slid nearly 6% yesterday after the semi luxury retailer met the lowered guidance targets from a January downgrade, but surprised by omitting its interim dividend.
The shares closed at $1.54, down 1.9% after it reported a 52% slump in net profit slump to $1.8 million in the January-half.
The company paid a 6 cents a share interim for 215-16 and a 3 cent final as the sales performance slowed in the second half of last financial year.
Oroton said there will be no interim dividend after its $4.5 million outlay to acquire a 30% stake in online lifestyle accessories business The Daily Edited.
That acquisition was announced on Monday.
“As a result of the investment, the board has determined not to declare a dividend for the half, believing that at the current time it is in the best interests of the company and shareholders to allocate and preserve capital for this exciting growth initiative,” Oroton said in yesterday’s results statement.
Earnings before interest tax depreciation and amortisation fell 43.5% to $5 million for the six months ending January 28 which is in line with the $4.5 million to $5 million guidance in January, when the retailer issued a profit warning after same-store sales failed to rebound after Christmas.
On top of the weaker sales, Oroton’s bottom line took a $1.3 million hit from the weaker Australian dollar, which pushed up the cost of (imported) goods. Sales fell 10% to $67.1 million, due mainly to the exit of discontinued categories, lower sales at outlet stores and weaker sales at GAP.
Group same-store sales excluding discontinued categories fell 8%. Oroton same-store sales were down 11% following 11% growth in the previous corresponding period, while GAP same-store sales fell 12% (compared with up 6.4% a year earlier).
Oroton closed its GAP outlet store at Birkenhead Point in Sydney last month to simplify its offer and focus on full-price sales at central city stores.
OrotonGroup chief executive Mark Newman said in yesterday’s release “Clearly this is a very disappointing first half result for the Group.”
"Positive trade in the second quarter up to Christmas Day was outweighed by sluggish sales in the first quarter and the much publicised, highly discounted and soft retail market from Boxing Day onwards, where foot traffic to all stores, across all channels and both brands, was lower than last year," he said. "This trend continued throughout January and adversely impacted the Group’s results."
Mr Newman said the group was encouraged by momentum in the repositioning of the core Oroton brand, where positive same-store sales were achieved in its 48 full-price retail and concession stores, excluding discontinued categories.
Mr Newman said group same-store sales had improved over the past seven weeks but remained negative.
"Whilst we remain cautious about the overall market, our focus for the remainder of the year is on continuing to grow the core Oroton first retail business, rejuvenating and balancing the important factory outlet business contribution, re-setting the GAP brand and providing a strong support platform for The Daily Edited to enable it to continue on its strong growth trajectory," he said.
