Analysts at Credit Suisse reiterated their “outperform" rating on
“We see the potential for EBIT to grow from the $13-$14 million expected in FY14 to $25-$35 million in five years," write the analysts, citing the following reasons:
They expect Oroton Domestic operations to maintain earnings given its mature profile;
Oroton International is likely to break even and generate a profit as stores mature and the brands gain traction;
GAP has the potential to generate $3 million from 10 stores in five years (and that’s conservative, they reckon); and
“Brooks Brothers provides the most interesting opportunity in our view," they write. “The brand has delivered solid initial results and appears well placed in the market (particularly in men’s casual wear). Twenty-five stores in five years appears reasonable; $12 million EBIT appears sound (implying $6m for Oroton).
Catalysts for the share price will be the performance of Brooks Brothers and GAP, they write.
The Australian Financial Review