High End Store Oroton Downgrades With Loss of Ralph Lauren

Luxury fashion company Oroton, which holds the licence for bringing in expensive merchandise to the country, has experienced a 10% loss and may continue on a decline as it loses its agreement with Ralph Lauren recently.

As the company is preparing its latest financial report, its heads said that the group is expecting earnings to fall about $40 million for 2012-2013, before taxes and interests, even as the company has made a $5 million one-off gain with losing Ralph Lauren. During the transition, the Ralph Lauren label recorded a sales spike for the company that marginally pushed its 2012-2013 profits better than the previous financial year.

The company said, however, that 45% of the group sales and 35% of its net profits were from the said fashion label, and its loss does leave a huge hole for Oroton.

Oroton expects that its EBIT for the following year will fall between $23-25 Million, if no fashion label will be acquired. The company said that it intends to hunt for a replacement and improve its fashion portfolio for fiscal 2014, with a potential shop opening in China in the next few months and two more in Hongkong and Dubai by the end of 2013.

Investors, meanwhile are still skittish, particularly when this downgrade is expected to turn for the worse. In the market closing last Friday, shares for Oroton fell to 10.6% or $6.54 before holding steady at $6.80.

On top of the loss, Oroton also acknowledges that profits are affected by loss of consumer confidence as well as the rise of competition.

Oroton is one of the first high-end retailers to experience a downgrade this year.