Oroton plumps up labels with US deal

Handbags and fashion accessories company Oroton has inked a deal with US apparel chain Gap Inc that could see it open 20 Gap stores within the next 10 years, as well as cherry pick from other Gap brands for the local market, including the Banana Republic and Old Navy labels.

Handbags and fashion accessories company Oroton has inked a deal with US apparel chain Gap Inc that could see it open 20 Gap stores within the next 10 years, as well as cherry pick from other Gap brands for the local market, including the Banana Republic and Old Navy labels.

The new partnership follows a similar regional licensing deal by Oroton in August to bring Brooks Brothers to Australia, with the new brands to help cover a hole punched in Oroton's earnings this year after the loss of its Ralph Lauren licence.

Oroton said it had secured an exclusive franchise agreement with Gap in Australia and New Zealand, with Oroton gaining the first right to develop the Banana Republic brand and Old Navy should Gap decide to franchise the retail concept in the region.

The Gap deal will be for an initial 10 years, with an option to renew for a further 10. Oroton will be able to operate Gap from free-standing stores, department stores or clearance stores as well as a local e-commerce site.

Oroton and Gap may elect to enter a 50-50 joint venture for fair market value after five years, while Gap has the right to buy 100 per cent of the local franchise back any time after five years. It is planned Oroton will open up to 20 Gap stores over the next 10 years.

"This partnership is an endorsement of our skills and expertise in managing premium international brands in our home country," Oroton boss Mark Newman said.

"We are looking forward to building on the existing business by rolling out more stores and further strengthening the presence of the brand."

Stefan Laban, senior vice-president Gap International, said Oroton had demonstrated its ability to manage premium international apparel brands.

In August, Oroton unveiled a shock profit downgrade, partly due to the removal of Ralph Lauren from its stable, which sent its shares tumbling 10 per cent. Its deal with Brooks Brothers will help plug some of that earnings gap, with Oroton unveiling plans for up to 25 stores by 2019. Shares closed down 4¢ at $5.40 on Thursday.

Related Articles