Oroton secures Banana Republic

 

Gap store interiorOrotonGroup has been given first dibs on Banana Republic and Old Navy, as part of its official agreement with Gap Inc signed this month.

Gap has officially sealed its Australian agreement with Oroton, following the severing of the US chain’s local licensing agreement with Busby Holdings.

The agreement will see the retail group expand the US denim and fast fashion icon across Australia and New Zealand.

Oroton has been given first rights to develop Gap Inc’s Banana Republic brand in these markets and the option to develop Old Navy.

Gap Inc has not yet decided whether to franchise the Old Navy brand in New Zealand or Australia.

The franchise agreement is for an initial term of ten years with an option to renew for a further decade.

It will cover free standing stores, department store shops, clearance outlets, and a local e-commerce presence.

Inside Retail PREMIUM reported earlier this month that the ink would be dried on Oroton and Gap’s agreement by the end of October.

Busby Holding’s subsidiary, Brand Republic, first brought the iconic fast fashion denim retailer to Australia in 2010.

It has opened three stores at Melbourne Central, Chadstone Shopping Centre, and Westfield Sydney, as well as an outlet store.

Oroton’s international agenda

Oroton signed a 10 year joint venture agreement with another iconic US chain, Brooks Brothers, in August, with plans for up to eight Australian stores.

The group’s like for like sales were up one per cent in financial year 2013, however, earnings were down overall, in part due to the performance of core brand, Oroton.

Its performance was buoyed by its now-defunct license agreement with another US retailer, Ralph Lauren, which ended in June.

Earnings before interest and tax (EBIT) were $40.2 million, in line with the group’s warnings to investors in August.

Gap was founded in California in 1969 as an accessible denim retailer, with it today having more than 3100 company stores and 300 franchised sites globally.

It was one of the first international brands to enter the country, with it followed by Zara, Topshop, and the soon to open H&M.

Mark Newman, CEO of OrotonGroup, said the partnership is “an endorsement of our skills and expertise in managing premium international brands in our home country”.

“We are looking forward to building on the existing business by rolling out more stores and further strengthening the presence of the brand.”

OrotonGroup will operate Busby’s stores with immediate effect and expects to open new Gap stores by early 2014.

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