Oroton hits its earnings forecasts, its shares surge

An Oroton bag. Lisa Maree Williams/Getty Images

Shares in luxury goods brand OrotonGroup jumped after confirming its earnings guidance.

A short time ago, they were up 8.2% to $0.855.

In a market update, the company says its underlying EBITDA (earnings before interest, tax, depreciation and amortisation) for 2017 will be at the high-end of the previous guidance range of $2 million to $3 million.

This takes into account an underlying EBITDA loss of about $2.6 million for the Gap business, which is due to close by January 2018.

OrotonGroup, which has the Gap franchise in Australia, earlier this month announced it will discontinue the business locally, with the six stores closing.

Non-core costs include non-cash impairment of Gap assets for about $3.3 million and other Gap related exit costs of $1.7 million.

“These costs do not include any Gap lease exit costs which are subject to ongoing commercial discussions with lessors,” the company says.

OrotonGroup, hit by weak retail demand, has been conducting a strategic review of its business.

The company says trading has been “positive” in the first four weeks of 2018. Across the Oroton business like for like sales improved against the first four weeks of 2017.