Brooks Brothers weighs on Oroton

Brooks Brothers, Sydney

Shares in luxury fashion and accessories retailer, Oroton, have plummeted after it became the first retailer since Christmas to warn of a profit fall.

The company’s underlying earnings in the first half of its fiscal year are set to fall by between $2.5 million and $3.5 million, from $8 million in the same period a year ago.

Oroton had already indicated its earnings would fall, mainly because of less discounting on its products, the cost of starting up its joint venture with US clothing label, Brooks Brothers, and the closure of a store in Hong Kong.

Sales have picked up in the past three months, which takes in the Christmas period, but not enough to offset lower earnings in the three months to October, Oroton said on Thursday.

Oroton shares were down 95 cents, or 24.7 per cent, at $2.90 at 1336 AEDT, their lowest level since mid-2009.

Oroton CEO, Mark Newman, said higher average prices and a new advertising campaign featuring actress, Rose Byrne, are contributing to the recent lift in earnings.

But Oroton is also being hit by costs from opening of three new Gap stores under its franchise deal with the US retailer.

Brooks Brothers is also making larger than expected losses, because of delays in setting up its online store and a high proportion of sales from its factory outlets.

Newman said earnings in the second half of the year should rise modestly from the $5.3 million achieved in the same period in 2014, with the company confident in its strategy to strengthen its brand.


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