OrotonGroup hopes a growing online presence can help boost the flagging sales that contributed to the handbags and accessories retailer's 52 per cent plunge in half year profit.
Oroton's net profit in the six months to January 28 fell to $1.8 million, as revenue dropped 10 per cent from a year earlier.
An 11 per cent fall in like-for-like sales were prompted by Oroton's exit from women's apparel, shoes and lingerie, lower sales at its factory outlets and a decline in sales at its seven GAP stores.
Its 14 factory outlets experienced a drop in foot traffic as customers shifted to online, and sales were also down due a lack of product variety.
Oroton said online sales now represent 12 per cent of its sales.
"We continue to prioritise and invest in this store and had a complete relaunch in early February, with enhanced navigation, product pages, check-out and delivery options," the company said.
Oroton on Monday announced its purchase of a 30 per cent stake in online leather accessories business The Daily Edited for $4.5 million, which it expects to accelerate the growth of its online operations.
Like-for-like sales at GAP dropped 12 per cent due to fewer customers in its stores, the poor performance of its women's range, and heavy discounting in spring and summer because of a cool start to spring.
"The brand will launch a local online store in July, which will improve brand visibility and accessibility," Oroton said.
Chief executive Mark Newman described the half year result as very disappointing.
Trading from November up to Christmas Day was positive, but that was outweighed by sluggish sales between August and October, and heavy discounting and soft retail market since Boxing Day and throughout January, he said.
Trade has improved in the past seven weeks, though like-for-like sales are still weaker than in the same period a year ago, Oroton said.
The company's shareholders will not receive a dividend, as Oroton said it was in their best interests to allocate and preserve capital for the "exciting growth initiative" that is the stake in The Daily Edited.
Oroton shares dropped three cents to $1.54.
OROTON PROFIT PLUNGES AMID SOFT POST-XMAS SALES
* Half year net profit down 52pct to $1.8m
* Revenue down 9.9pct to $67.1m
* No interim dividend, down from 6 cents, fully franked.
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