Oroton in halt over RL licence BY: TERESA OOI From: The Australian August 15, 2012 4:05PM
UPMARKET handbag and accessories retailer Oroton has been placed in a trading halt ahead of an announcement about its licence deal with US designer label Ralph Lauren.
Oroton said it expected to make an announcement within 24 hours about "the status of its extension of its licence with Ralph Lauren beyond 30 June 2013".
Oroton has the licensing rights for Polo Ralph Lauren in Australia and New Zealand which is due for renewal in June next year. It also has the option of another two years' extension.
However, it is understood the company has been negotiating with Polo/Lauren Company for a further three-year extension.
Clime Capital analyst Adrian Ezquerro said that there was a risk that Ralph Lauren could pull the licence deal.
"There is a possibility that Ralph Lauren could terminate the licence, but it would have to make a payment for inventory and goodwill to Oroton," he said.
"Historically, RL in the US has been scaling back on its external licences globally from five in 2009 to two licences - one in Australia and NZ and the other in Chile.
"However, since Australia and NZ is such a small market for the brand, it is more sensible for Oroton to retain the licence."
Polo RL contributes about 30 per cent of Oroton's revenue of $183 million.
Clime chief investment officer John Abernethy said that Oroton is practising good corporate governnance by putting its shares in a trading halt.
"If there's any chance of speculation or a leak from the negotiations, then its best practice that Oroton's stock is not trading."
Oroton shares last traded at $7.74 on the Australian Securities Exchange.
ORL Price at posting:
$7.74 Sentiment: None Disclosure: Not Held
