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Oroton’s future looks bright

OrotonGroup (ASX: ORL) is looking forward to a strong holiday shopping season to end the first half of 2014 as strongly as possible, although the company admits that it does not expect the two new licenced fashion brand lines, Brooks Brothers and The Gap, to have a material effect on 2014’s full year results.

With the expiry of the licencing agreement it had with Ralph Lauren on June 30, this financial year will be the first full year without the revenue from the iconic brand name’s goods. Thus, this year is important in getting both domestic and overseas business going significantly.

It ended FY 2013 with 68 stores, opening an additional 11 new stores during that time. In 2014, it will operate the three existing Gap franchise stores from November under the new agreement with The Gap (NYSE: GPS), and open more stores within the financial year. Separately, it will open the first Brooks Brothers stores in February also.

Asia is another market that the company is expanding into, and currently has two stores in Singapore, 5 in Malaysia, and has recently opened 3 more stores in Hong Kong and Shanghai. It plans to open a licenced store in Dubai during FY 2014.

As are many retailers, the company is also seeing growth in its online sales, now totalling 10% of all sales domestically and abroad.

To open up wider income streams, the company plans to make and retail smaller, simpler handbags at around a $200 price range, and at the other end produce upscale handbags around the $1,000-$1,500 range that have higher craftsmanship and materials.

It seems to be making the right moves to compensate for departure of Ralph Lauren-related sales, but will take some time for momentum to pick up with the new stores and brands.

Investors in specialty retail fashion will also know of Country Road (ASX: CTY), which operates the Country Road and Trenery brands. It announced its sales over the 20 weeks until November 16, showing a 46.2% increase in revenue compared to the previous corresponding period.

Sales were $285 million, up from $195 million, and comparable sales were up by 7.6%. The sales of its Witchery and Mimco businesses, acquired on September 29, were added into the total revenue, but not within the comparable sales.

Foolish takeaway

Just like keeping up with the latest fashion trends, you also have to see how companies are growing both at home and abroad. You can do your research when you shop, noticing busy and new stores that are pulling in shoppers.

Consumers vote with their feet, so watch where they go, and you can see how the business flows towards one store and away from another.

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Motley Fool contributor Darryl Daté-Shappard does not own shares in any company mentioned. 

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