Australian luxury fashion accessories company OrotonGroup is set to close all stores under the Gap franchise business by 31 January next year, due to increasing losses.

OrotonGroup has signed an agreement with the US-based fashion company to end their franchise contract.

It did not disclose the financial impact of the proposed closures on the group’s operations.

OrotonGroup CEO Ross Lane said: “The board and I thank the entire Gap Australia and Gap Inc. team for their dedication and substantial efforts to develop the Gap business in Australia over recent years.”

Following the agreement, OrotonGroup will discontinue future investments in the franchise.

The current decision, along with the amendment of the working capital facility with financial services firm Westpac, forms part of the company’s strategic review that was previously announced in May.

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By GlobalData
“Following the agreement, OrotonGroup will discontinue future investments in the franchise.”

They will enable the company to allocate resources to continue operating its core Oroton brand in the future.

Earlier this week, it secured an extension to a $35m debt it owes Westpac.

As part of the strategic review, Oroton is contemplating selling its business, in addition to recapitalisation or refinancing its debt facilities.

The company is projecting its net debt at FY17 year-end to be around $6m.

It offers handbags, satchels, small leather accessories, jewellery, ties, umbrellas, knitwear, lingerie, men’s underwear and shoes, as well as exclusive boutiques across Malaysia, Australia and New Zealand.