Struggling boutique handbag retailer OrotonGroup has appointed its major shareholder as interim chief executive after its boss resigned fresh from a disappointing half-year result.
Mark Newman, who has held the top job for four years, will be replaced temporarily by director Ross Lane, who is the company’s biggest shareholder with a 21 per cent stake.
Combined with fund manager Will Vicars, the pair own 38.5 per cent of the company, which has a market capitalisation of just $68 million.
The stock is not broadly covered by the market. A privatisation would depend on the major shareholders’ appetite for further investment. It’s understood Oroton has not been shopping its brands around.
Dean Fergie, director and portfolio manager at Cyan Investment Management, said Oroton’s recent first-year sales were “poor to say the least, with negative like-for-like sales and an earnings before interest and tax margin that halved.” Oroton also halted dividends.
Chairman John Schmoll said Mr Lane’s “intimate knowledge” of OrotonGroup and his “broad retail experience” meant he was “ideally qualified to lead the company during this important period of transition.” Mr Schmoll is a former chief financial officer of Coles Group.
In early trade, OrotonGroup shares closed up 1??, to $1.62.
Oroton recently blamed its disappointing first-half result – when net profit dived 52 per cent to $1.8 million for the six months ending January 28 – on its unprofitable GAP brand, unseasonable weather, “a structural change in shopping habits,” the exit of discontinued categories, lower factory outlet sales at Oroton, lower foot traffic and foreign exchange problems.
It is seeking to target a younger and broader customer, through using “influencers” to promote its products, putting more money into social media, and promotions such as its “Great Barrier Reef Collection.”
OrotonGroup recently dumped Bridesmaid actress Rose Byrne as its model, and paid $4.5 million for a 30 per cent stake in accessories brand The Daily Edited.???