Oroton Group says it wont be dragged into another discounting war this year as it makes peace with loyal shoppers fed up with seeing prices for the retailer's high-end fashion handbags and accessories slashed outside of traditional sale periods.
"We are not going to have a sale every five minutes, we are a luxury brand," said Oroton chief executive Mark Newman yesterday.
The group will also push ahead with rolling out its new brands, Brooks Brothers and GAP, and persist with its struggling Asian business, which increased losses last financial year to $3.4 million from $2 million. Oroton believes it can eventually squeeze out a profit from its international stores.
Without Ralph Lauren, Oroton was forced to take an axe to its final dividend. The dividend was hacked to 8 cents per share from 28 cents, taking the full-year pay out to 16 cents per share against 50 cents last year.
Oroton posted a full-year net profit of $8.3 million on Thursday, down from a profit of $27.45 million in fiscal 2013 when the group still had the Ralph Lauren licence. Revenue for 2014 was $124.9 million, down from $186 million in 2013.
On continuing operations (ex-Ralph Lauren), Oroton's profit for 2014 was up 16 per cent and revenue was 26 per cent stronger.
Margins declined during the year, down to 62.5 per cent due to the launch of its lower margin GAP brand as well as discounting of the Oroton brand in the face of intense competition.
Mr Newman said Oroton would resist constant sales to bolster margins.
"We had slipped into a pattern of having ever-increasing amounts of 'friends and family' type sales.
"We have made a decision that this year we are going to stop doing that, we are going to stop those 'friends and family' sales.
"Because we have got customers who are very happy to come in at the beginning of the season and see a beautiful bag, buy them, spend $595 on them, and then get irritated when two weeks later they get an invitation to a 'friends and family sale' where the handbag is 50 per cent off."
Shares in Oroton rose 45 cents, or 12.3 per cent, at $4.10.
