Luxury goods sales data may not bode well for Oroton

Recent reports suggest global sales are slowing

a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Financial Times highlighted last week that recent company results from luxury brand owners showed declining sales growth. Privately owned Italian fashion house Prada, saw its growth slow from 48% to 14% in the first quarter of 2013, while London-based Mulberry Group (LON: MUL) last week reported a 28% drop in profits. The most telling factor from these reports was that there was a sharp slowdown in Asia.

OrotonGroup (ASX: ORL) which lost the Ralph Lauren Polo license last year, currently has two potential growth engines; expansion into Asia and expansion of the product range. The lacklustre Australian retail market, coupled with the now clear decline in Asian appetite for luxury purchases, explains Oroton's flat half yearly results. Indeed it wasn't a bad result, given the circumstances.

Oroton is still primarily domestically focussed with 64 stores in Australia and New Zealand and just 7 stores in Asia. Management has stated that the aim is to grow Oroton internationally into Asia and the Middle East. Two more China stores are committed to be opened by September 2013. This is likely the right strategy; however it wouldn't be great timing if it corresponded with this latest reported downturn in Asian demand.

Foolish takeaway

Whether it is the brand owners, or the re-sellers such as Myer (ASX: MYR) and David Jones (ASX: DJS), retail sales growth is definitely hard to come by at the moment. The current situation probably won't last forever, with Oroton selling products which are desired and sought after and department stores still receive a lot of foot traffic. Investors alert to temporary as opposed to permanent changes, might soon have the opportunity to purchase some good retailers at very reasonable prices.

The Australian Financial Review says "good quality Australian shares that have a long history of paying dividends are a real alternative to a term deposit." Get "3 Stocks for the Great Dividend Boom" in our special FREE report. Click here now to find out the names, stock symbols, and full research for our three favourite income ideas, all completely free!

More reading

Motley Fool contributor Tim McArthur does not own shares in any of the companies mentioned in this article.

More on ⏸️ Investing

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest
ETFs

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

Two people in suits arm wrestle on a black and white chess board.
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »

⏸️ Investing

Why Fox (NASDAQ:FOX) might hurt News Corp (ASX:NWS) shareholders

News Corporation (ASX: NWS) might be facing some existential threats from its American cousins over the riots on 6 January

Read more »