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OrotonGroup to close Gap fashion stores in Australia

Published 08 August 2017

Retail company OrotonGroup said it will discontinue the troubled Gap franchise business in Australia.

The company has signed agreement with American clothing and accessories retailer Gap to end franchise arrangements.

Oroton said that it will close all the existing Gap outlets by the end of 31 January next year and focus on its core handbag business to reduce the future financial losses.

The company operates six Gap stores in Australia, with four in Sydney and two in Melbourne holding an employee force of over 200 employees.

The company has said that it would try to redeploy as many workers as possible but anticipates few layoffs in the process.

OrotonGroup chief executive 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.”

Lane further added: “OrotonGroup also acknowledges the support and co-operation that it has received from Gap Inc. in amending existing arrangements.”

The Australian company is working on the details of the closure plan and said that it is too early to disclose the estimated financial impact on the business.

In an effort to maximize value for the company and its stakeholders, Oroton is analyzing various strategic processes that may include sale, recapitalization or refinancing of debt.

However, the board notices that there is no certainty that any particular process will result in a proposal or transaction for OrotonGroup, nor what the terms of any such proposal or transaction would be accepted or recommended by the board.

Image: Gap at Hillcrest Mall  Photo: courtesy of Raysonho @ Open Grid Scheduler / Grid Engine.