Oroton says it earnings for the 2015 financial year will be better than forecast following the sale of its share in the Brooks Brothers Australia joint venture.
CEO Mark Newman says he expects EBIT (Earnings Before Interest and Tax) to be about $6.7 million compared to the $4.5 million previously announced.
“The improvement is primarily due to the better trading performance from our core Oroton brand in June and July and the exclusion from underlying earnings of our share of the trading losses in the Brooks Brothers joint venture,” he says.
Oroton, which has been bleeding cash setting up the American clothing brands Brooks Brothers and Gap in Australia, sold its stake in the US menswear store back to Brooks Brothers.
The luxury goods group had spent two years establishing Brooks Brothers in Australia with 13 stores and an online store. However, the startup costs 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.
The company will announce its 2015 financial year results on September 17.
Oroton shares were up more than 10% to $2.16.