AUSTRALIAN luxury goods brand Oroton (ASX: ORL) has warned landlords that if rent is not slashed then more stores will close.
Landlords will have to cut Oroton rents by up to 40 per cent within the next few days or the national retailer will shut down stores.
This latest development in the long-running demise of the national retail sector sees Oroton, an ASX listed luxury handbags and goods retailer, pulling out the final stops to keep the business afloat.
Over the weekend, two stores were shut on Sydney's Pitt Street Mall and Macarthur Central in Brisbane CBD after the landlords refused to cut the rent.
Oroton went into voluntary administration in late November 2017 following a rough slide through 2018, which included a 20 per cent share price wipe during a single day of trade in May.
The placement of the company into voluntary administration was the result of the company being unable to find a buyer while it was carrying out a strategic review over the past six months.
Fund manager Will Vicars was named the preferred Oroton bidder after he made a last-minute offer to rescue the company before Christmas.
Vicars' offer for Oroton has not yet been made public, but it will be made known once Deloitte, Oroton's administrator, publishes its first report in the next few weeks.
Last week, as reported by The Australian, Vicars wrote to Oroton's landlords saying rent needed to be cut by 40 per cent at some sites for the retailer to remain viable. Vicars has said he will walk away if rents are not reduced.
As the company is in voluntary administration Oroton has the option to pull out swiftly from the rental agreements, which would leave landlords vulnerable to the costs of Oroton's exit.
The remaining 57 stores, governed by 20 different landlords, now face a tight deadline to respond to Oroton's hefty threats. The Australian reports that Vicars has asked for responses from landlords by Friday this week.
This tight deadline is in place because the company needs to buy new stock by the end of January for the next few months.
If Vicars' proposal does not go ahead, the future of Oroton is gloomy considering there are no other buyers lined up.
Business News Australia
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