Sydney, Dec 11, 2008 (ABN Newswire) - Upmarket retailer OrotonGroup Ltd (ASX:ORL) says it is well placed to see its way through the current financial crisis.

Sales are up 10% in the first five month of the new year, which is solid growth compared to what is happening at more general retailers like Harvey Norman, Noni B, Specialty Fashion group and other chains.

Chief executive Sally Macdonald told shareholders at the company's annual general meeting on Wednesday that it had a strong base built on its two major brands Polo and Oroton.

"We continue to seek further cost reductions and growth opportunities," she said.

"In short, we are running this business for the long term and have the luxury of a strong base on which to do so despite the obvious difficulties in the economy."

Ms Macdonald said trading in the first 19 weeks of fiscal 2009 had been encouraging.

Like-for-like sales were up 10 per cent on the same period in fiscal 2008.

"Both Polo and Oroton are trading individually at a positive 10 per cent like-for-like sales growth and most importantly this is being achieved without sacrificing gross margin," she said.

Ms Macdonald said with the all-important Christmas trading period was still ahead.

"We remain extremely vigilant to the risks and the volatility of the current environment and the uncertain trading conditions ahead of us," she added.

"But overall we are encouraged and working hard to ensure we continue to outperform the market and maintain our margin performance as we do so."

Chairman Ross Lane said OrotonGroup, like other retailers, was facing a "unique" time for the economy due to the global financial and economic crisis.

"We are fully aware of the financial crisis - and expect it to impact us all," he said on Wednesday.

"However, we are in a very strong position to successfully manage our way through this cycle - with our proven management team, a healthy balance sheet and two much loved and strong brand names.

"Your business is clearly being well run so we have a solid base in place as we navigate harder times.

"This solid base, we believe, gives us some flexibility to meet potential opportunities in the future, not just the challenges."

Mr Lane said the falling Australian dollar exchange rate will have an inflationary impact, albeit modest, on the company's cost of goods this year.

"But this will be relatively modest given the strength of our brands and robust margins and our conservative hedging policy which is detailed in our annual report.

"Additionally our Polo Ralph Lauren business has an unusually long forward planning cycle compared with other retailers.

"This additional time allows us to consider all of our options to manage foreign exchange volatility – for example, by increasing prices or changing the product mix, and/or seasonal flow or drop schedule by channel.

"These are just some of the scenarios the management team and board have discussed to ensure plans are in place to protect profitability and ensure earnings growth."

The shares didn't react to the positive news and closed unchanged at 42.20, only 10 cents above the 52 week low of $2.10.

Steel manufacturer BlueScope Steel Ltd aims to raise $300 million through an equity placement to institutional investors.

The company said in a statement yesterday that the shares would be priced at $3.10 each under the placement.

Given the gross proceeds being targeted, the placement should involve the issue of about 97 million shares.

BlueScope said it had signed an underwriting agreement in relation to the placement.

BlueScope's shares entered a trading halt on Tuesday and are expected to remain suspended until the placement is concluded.

The shares last traded at $4.03 on Tuesday, so the discount in the issue price is a big one.

Chief executive Paul O'Malley said last month that the company was focused on maintaining a solid balance sheet during the financial crisis, so acquisitions were off the table.

The company also said in November that trading conditions in Australia remained relatively robust despite weakening demand for steel products, especially from the residential sector.

There are media reports the company is getting rid of 200 contractors at its Port Kembla plant in NSW as a first round cost saving.


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