Oroton, which has been bleeding cash setting up Brooks Brothers and Gap in Australia, is selling its stake in the US menswear store.
The luxury goods group has spent two years establishing Brooks Brothers in Australia with 13 stores and an online store.
However, the startup costs have dragged on profits. In March Oroton posted a 57% drop in profit to $2.2 million for the first half. And in May the company issued a profit warning, saying sales for Brooks Brothers and Gap hadn’t been as good as expected.
Now Oroton is selling its stake in the joint venture company, Brooks Brothers Australia, to Brooks Brothers International.
CEO Mark Newman says the company has worked well in partnership with Brooks Brothers.
“However, we have agreed that it is now appropriate for Brooks Brothers Group to manage the Brooks Brothers business in Australia and for us to further focus our resources on our core Oroton brand,” says Newman.
“We look forward to continuing to work closely with Brooks Brothers by providing some support services in the future.”
Oroton will provide management and administration services to Brooks Brothers Australia for up to two years.
The sales price hasn’t been revealed but Oroton says the transaction is not anticipated to have any further negative impact on Oroton earnings for 2015.
Claudio Del Vecchio, chairman and CEO of Brooks Brothers Group, says the company looks forward to further expanding Brooks Brothers in Australia.