Oroton loses rights to Ralph Lauren

SHARES in the fashion brand Oroton Group are expected to fall heavily when the stock resumes trading today after the company announced it has lost the licence to exclusively edistribute Ralph Lauren in Australasia from June 30 next year.

SHARES in the fashion brand Oroton Group are expected to fall heavily when the stock resumes trading today after the company announced it has lost the licence to exclusively edistribute Ralph Lauren in Australasia from June 30 next year.

The company, one of the few strong performers among Australia's listed retail stocks, said Ralph Lauren accounted for about 45 per cent of sales and 35 per cent of net profits.

"After over 23 years developing the Ralph Lauren brand in Australia and New Zealand we are disappointed to be ending our business partnership," said Oroton's chairman, Ross Lane.

"However we are pleased to be in a position to accelerate the expansion of the Oroton brand in Asia and potentially to pursue other opportunities, including capital management."

The company said the business will be transferred to Ralph Lauren corporate next year. The global brand is required to pay Oroton for certain inventory and store assets valued at $30 million.

The Oroton chief executive, Sally Macdonald, underlined the opportunities in Asia that Oroton could pursue with the freed-up capital.

The company is expected to open new stores in Hong Kong and Shanghai next year and has seven stores trading in Malaysia and Singapore.

Oroton said the Ralph Lauren business soaks up 35 per cent of corporate overhead expenses and said next year's results will reflect one-off costs associated with the transition. Its 2012 financial year results will be announced on September 20 and are not expected to be materially affected by this announcement.