polo clothes Marcs mars Oroton result
Oroton Group’s struggle to get its Marcs fashion brand firing has meant the company has remained a spectator during the retail profit bonanza going on around it.
The upmarket retailer yesterday reported a net profit of $8.4 million for the year to July 31, right in line with the previous 12 months.
Despite underperforming its peers such as Colorado Group, which yesterday presented its shareholders with a 159 per cent rise in first half net profit, shares in Oroton rose 5.4 per cent, or 15 , to $2.95.
Oroton managing director Ross Lane said Oroton’s focus in the new financial year was to ensure that Marcs, bought for $21 million in 2002 from founder Mark Keighery, began to deliver results consistent with its potential.
Factory outlets were a drag on Marcs’ performance as Oroton struggled to offload the huge amount of stock it took on from the former management; whereas the new Marcs retail stores, particularly the Bondi Junction, Sydney, shop, were among the group’s best performers, Mr Lane said.
“Marcs’ performance was a consequence of problems experienced with the integration of the Marcs business into Oroton Group and, ultimately, poor product decisions,” Mr Lane said.
“This resulted in a brand contribution which was significantly below potential in 2004.”
A new middle management team was installed at Marcs after the unit contributed a net loss of $700,000 to Oroton’s half year results and Mr Lane said the liquidation of pre acquisition stock was now complete.
In contrast, Mr Lane said the Oroton brand, the company’s oldest and largest, performed well in a healthy retail environment “that supported fashion conscious accessories”.
Oroton’s sales showed a 36 per cent increase on a like for like basis. Overall sales revenue increased by 21.4 per cent to $143.6 million in the period.
“Polo (Ralph Lauren) again performed consistently during the year. Sales were marginally above those for 2003 whilst brand contribution remained strong,” Mr Lane said.