OROTONGROUP LIMITED 17 March 2016
The Board of OrotonGroup Ltd (the Company) today announced the Company's financial results for the half year ended 23 January 2016 (HY16).
OrotonGroup CEO, Mark Newman, commented, "The positive results in HY16 reflect the good momentum now being achieved by the strategic initiatives undertaken in the last 18 months that we previously communicated.
These initiatives include a sharpening of focus on our core Oroton brand and investing in elevating this iconic brand to a true affordable luxury offering, continued improvement in the international channel, accelerating trading performance of the Gap brand and exiting the loss making Brooks Brothers joint venture in July 2015.
All of these initiatives have been important in materially improving the Group's earnings in the first half of the year. In summary:
Overall group revenue increased +12% with Group like for like (LFL) sales +10% driven by both the Oroton and GAP brands which contributed positive LFL sales growth across all channels.
Group EBITDA increased +25% to $8.9m
Group EBIT increased +38% to $6.2m due to strong growth in sales and margin dollars from both brands, partially offset by foreign exchange impacts, which reduced EBIT by approx. $0.9m. Prior period results also included losses of $1m relating to the now exited Brooks Brothers (BB) joint venture
Underlying Group EBIT(1) excluding BB losses in HY15 improved 8% from $5.8m in HY15 to $6.2m in HY16
Group NPAT increased +73%, which is higher than the EBIT growth, due to a lower effective tax rate from less non-deductible losses in the International channel and no equity accounted losses in Brooks Brothers in the current period
Group balance sheet in a strong position with $2m in net cash, compared to net debt of $5.6m as at HY15 and $5.8m as at FY15
The Board is pleased to declare an increased interim fully franked dividend of 6 cps.
HY16 $m | HY15 $ m | Change % | |
Revenue | 74.5 | 66.8 | +12% |
Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) | 8.9 | 7.1 | +25% |
Earnings Before Interest and Tax (EBIT) | 6.2 | 4.5 | +38% |
- Underlying EBIT excluding HY15 Brooks Brothers losses(1) | 6.2 | 5.8 | +8% |
Net Profit After Tax (NPAT) | 3.8 | 2.2 | +73% |
Basic Earnings Per Share (EPS) (Cents) | 9.2 | 5.4 | +73% |
Interim Dividend Per Share (DPS) (Cents - Fully franked) | 6.0 | 4.5 | +33% |
Net Cash / (Debt) | 2.0 | (5.6) HY15 (5.8) FY15 |
(1) No underlying adjustments in HY16; Underlying HY15 comparatives are reconciled to IFRS audited measurements through the add back of the onerous Hong Kong Store lease after exit ($0.3m) per HY15 presentation and to be consistent with the FY15 year end presentation by adding back the trading losses from Brooks Brothers Australia joint venture ($1.0m) following the exit in July 2015
OROTONThe main engine of the Group is the core Oroton brand which performed strongly in the half with like for like (LFL) sales increasing by +11% compared to -6.5% in HY15 as the investment in a true affordable luxury positioning continues to gain traction and we cycled beyond the aggressive discounting from FY14 and prior years.
This positive performance is confirmation that the investments in our new store concept, increased average selling prices, limited edition products and new categories is resonating with our customers. In addition, these initiatives have been supported by investment in compelling brand campaigns across all media.
The increase in LFL sales communicated at the 2015 Annual General Meeting, gained momentum over the crucial Christmas and New Year sales period. This increase in LFL sales was achieved in all channels, but particularly pleasing was the strong growth in the full priced boutiques and the online store with the latter now representing approximately 12% of sales.
In the International business, we have also made some good ground with positive LFL sales and LFL gross margin dollars, and exiting loss making stores, leading to a significant reduction in losses in this channel.
The GAP brand enjoyed good momentum in the half with positive LFL sales of +6% through increased brand awareness, strong sell through of core ranges, such as logo and denim, and effective tactical promotions in what is a very competitive environment. The brand continued to improve margin generation, with LFL gross margin dollars outperforming sales growth, which combined with strict cost control led to a significant reduction in losses in the half compared to the HY15.
The board has declared an interim fully franked dividend of 6 cps. The record date for determining the dividend entitlement is 6th April 2016 and payment will be made on 20th April 2016.
Our focus remains on our 3 strategic pillars of repositioning the core Oroton brand, eliminating losses in the Oroton International business and continuing the good momentum in the GAP brand.
Underlying initiatives include further refurbishment to the new Oroton store concept, evolution of products and targeted investment in marketing, together with ongoing review of individual stores across both brands compared to strict performance measures.
This focus, together with the pleasing first half momentum and a strong balance sheet, puts us in a good position for the rest of the financial year. Despite the current business environment being uncertain and the market continuing to be heavily discounted, we anticipate positive LFL sales growth in the second half of FY16."
For further information please contact:
Mark Newman, CEO/MD or Vanessa De Bono, CFO/Company Secretary, Tel: +61 2 8275 5500
Important notice and disclaimer:
This presentation includes information about the activities of OrotonGroup Limited ("OrotonGroup") which is current as at 17 March 2016. It is in summary form only and is not intended or represented to be complete. No representation, express or implied, is made as to the fairness, accuracy, completeness or correctness of information contained in this presentation. Please read this presentation in conjunction with OrotonGroup's other periodic and continuous disclosure announcements filed with the Australian Securities Exchange. These are available at www.orotongroup.com
OrotonGroup Limited issued this content on 17 March 2016 and is solely responsible for the information contained herein. Distributed by Public, unedited and unaltered, on 16 March 2016 23:22:37 UTC
Original Document: http://www.orotongroup.com.au/investor-relations/asx-releases?task=weblink.go&id=195
