Oroton's plan to close its Gap clothing stores in Australia in an attempt to limit future losses has triggered another fall in its shares.
The struggling luxury handbag retailer says it will sever its four-year partnership with the US apparel brand and will close all six of its Gap stores by the end of January.
The group is trying to stem its losses which included an 11 per cent fall in sales in the nine months to the end of April, compared to the same period a year ago.
Oroton has previously said it expects Gap is will contribute a $3.5 million loss for the 2017 financial year.
On Friday, it said it was too early to quantify the financial impact of the Gap closures.
"This decision will end the group's future investment in the franchise, limiting related future losses," a statement from Oroton said.
The news has unnerved investors who sent Oroton shares down 3.81 per cent, or four cents, to $1.01 by the close of trading.
Citi group analysts in June warned that Oroton could end its ties with Gap, a move they estimated would cost about $6 million.
They said the Gap joint venture had not been profitable and Oroton could exercise an option in February 2019 to end the tie-up by transferring its ownership of half of the joint venture back to GAP in the US.
But, Oroton's announcement on Friday said it had entered a binding agreement with Gap to discontinue the franchise in Australia.
Earlier this week, Oroton secured a six-month extension of a $35 million finance package with Westpac.
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