Legendary Aussie mesh bag maker Oroton collapses after failed review
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Legendary Australian handbag maker OrotonGroup — founded in 1938 — has this morning placed itself in voluntary administration after a failed strategic review.
The fashion label is best known for its 1960s mesh bag — described as “the must-have accessory for disco girls and socialites alike”, on the brand’s website.
In the 1970s, the Oroton ‘O’ became a registered trademark.
Oroton announced it was struggling in May and started a review of its strategy to find a path to profit.
“Despite a comprehensive process, the strategic review has not resulted in any viable option for recapitalising or selling the Company at this point in time which could achieve a better outcome than voluntary administration,” Oroton told investors.
The decision was a disappointment, said Oroton managing director Ross Lane, grandson of founder Boyd Lane.
“It is apparent that voluntary administration is necessary to protect the Oroton business and the future of this iconic Australian brand,” Mr Lane said.
The Lane family own 21 per cent of the shares.
At its heights in 2011, the company was valued at $380 million, but has since sunk to just $18 million at 44c a share.
Last year Oroton lost $14 million, down from $3.4 million profit the year prior.
At the end of the period, the group’s net debt was $5.4 million.
Administrator Vaughan Strawbridge said the decision would allow for a full restructure.
“Our focus is on continuing to operate the business as we seek a recapitalisation or sale of this iconic brand,” he said.
“Our ambition is that a stronger Oroton business will emerge from this process.”
The Oroton Group brought the Gap chain to Australia in 2013 on a 10-year franchise agreement, but announced earlier this year it would close all six of its Gap stores by January 2018.
A planned AGM on Friday has been cancelled, with the first meeting of creditors scheduled for December 11.
Oroton said the stores will continue to trade as usual.