By Robb M. Stewart
MELBOURNE, Australia--Australian fashion retailer OrotonGroup
Ltd. (ORI.AU) is selling its stake in the local arm of Brooks
Brothers, the Wall Street menswear staple it helped launch in the
country two years ago.
Brooks Brothers has struggled to gain traction in Australia, and
Oroton in May said it was in talks with the parent of the brand to
find a way forward after local sales of both Brooks Brothers and
Gap Inc. clothing weakened.
Oroton said Friday it had signed a binding contract to sell its
interest in the Brooks Brothers Australia joint venture to Brooks
Brothers International LLC. No value for the stake was disclosed,
although Oroton said it didn't expect any further negative impact
on earnings this financial year.
Established in 1818, Brooks Brothers is credited with being the
first to offer ready-to-wear clothing, and also with supplying 39
out of 44 U.S. presidents. Its button-down dress shirts and
traditional suits remain a go-to look for American businessmen.
Oroton in August 2013 announced it had secured a majority 51%
interest in Brooks Brothers Australia in a venture that would
operate for an initial term of 10 years, with an option for the
other side to exit for fair market value after five years in
certain circumstances.
Mark Newman, chief executive and managing director of Oroton,
said his company had worked well in partnership with Brooks
Brothers over the past two years, introducing the brand and opening
13 stores and a local online site.
"We have agreed that it is now appropriate for Brooks Brothers
Group to manage the Brooks Brothers business in Australia and for
us to further focus our resources on our core Oroton brand, which
has significant potential," he said.
Brooks Brothers Group Chairman and CEO Claudio Del Vecchio in a
statement thanked Oroton for introducing the brand in Australia and
said he planned to further expand Brooks Brothers in Australia
after taking full ownership.
Sydney-based Oroton has stores across Australia, New Zealand,
Singapore, Malaysia and China, selling its own goods and
distributing clothing for Gap, Brooks Brothers and the Ralph Lauren
apparel brand.
In March, it said it would pay a sharply reduced dividend after
earnings for the six months to Jan. 24 were hurt by start-up costs
for the Brooks Brothers venture and one-off costs related to
opening three further Gap outlets in the region.
It warned in May it longer expected to grow its earnings in the
second-half of the financial year, after being hit with the cost of
ceasing heavy discounting, and as sales of Brooks Brothers and Gap
goods were lower than anticipated in recent months.
Write to Robb M. Stewart at robb.stewart@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires