Oroton posted a 57% drop in profit to $2.2 million for the first half as the retailer stopped discounting and worked to establish its GAP and Brooks Brothers brands in Australia.
CEO Mark Newman says the six months was a period of repositioning of Oroton and expansion of the GAP and Brooks Brothers brands.
He says lower sales were a result of reduced discounting in the Oroton brand, start-up costs in Brooks Brothers and the opening of three new GAP stores.
“The Oroton brand strategy to reduce the level of discounting, with a focus on quality margin generation has, as expected, led to lower sales,” he says.
Like-for-like sales of fell 6% but overall revenue was up 6% to 66.8 million.
The Brooks Brothers business, which started trading in February 2014, had larger start-up costs and a greater loss than expected during the half-year.
The company expects modest earnings growth in the second half of the financial year despite uncertain consumer confidence and economic conditions.
In GAP and Brooks Brothers, Oroton expects reduced losses as the brands benefit from improved margins and careful management of costs.
The first six weeks of trade since January are within expectations.
The company announced a full franked dividend of 4.5 cents per share.
Oroton shares are trading down almost 10% to $2.45.
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