The slide in Australian retailing continues with handbag retailer OrotonGroup collapsing yesterday and being placed into administration.
The company said the move came after an eight-month strategic review failed to secure a viable option to secure its future. Administration and possible resale was the only option.
Oroton joins a string of fashion retailers to collapse over the past 18 months, with Topshop, Marcs, David Lawrence, Herringbone, Rhodes & Beckett, Payless Shoes and Pumpkin Patch all failing. Some of these have been slimmed down and sold off.
Oroton said in August that it would close its six Gap franchise clothing stores so it could focus on its core handbag brand. Its problems can be traced back to when it lost its valuable Polo Ralph Lauren franchise several years ago. It tried to fill the gap with firstly Brooks Brothers, the US brand, without success and then The GAP, which also flopped and cost more than $11 million to close.
The news means that a mooted attempt to take the company private by the founding Lane family and their long time supporter, Sydney fund manager, Will Vicars came to naught.
The company’s shares went into a trading halt on Tuesday while the board finalised the result of its review. They closed at 43 cents, down from $7.80 in early 2013 (and more than $9 in 2011) and $2.44 a year ago.
Interim chief executive Ross Lane, whose grandfather Boyd Lane founded Oroton in 1938 and whose family holds 21% of the company’s shares, said management was unable to find a better outcome than voluntary administration.
Vicars owns around 18% and had advanced the company $3 million to finance its working capital needs while the review was conducted and to mollify its bank, Westpac.
Mr Vicars entered a put and call arrangement with Westpac to secure credit support for Oroton in August, which extended the maturity of the retailer’s $35 million facility with the bank to October, 2018.
Sydney based ragtrader, Gazal Corp owns around 7.3%. It the wholesaler of Calvin Klein, Tommy Hilfiger, Van Heusen and Pierre Cardin apparel in Australia.
"The board is disappointed that it has had to take this step after running such a comprehensive process," he said. "However…. it is apparent that voluntary administration is necessary to protect the Oroton business and the future of this iconic Australian brand."
Its 59 Oroton stores will continue to trade as usual while administrators Deloitte Restructuring Services pursue a sale or a recapitalisation, the company said.
Oroton has suffered falling sales in recent years and racked up a $14.2 million loss in 2017.
The first creditors meeting is set for December 11.