Architect of Oroton turnaround reveals secrets

The audience was there for a lesson in fashion retailing, and Oroton boss Sally Macdonald gave them one.

"If there's one thing you take away from this speech, it's how much cost-accounting matters," Ms Macdonald told an audience of Australian Institute of Company Directors members yesterday.

Speaking at the lunch in Perth, Ms Macdonald - credited with reviving Oroton from a business in the doldrums in 2006 to one now boasting some of the best margins in Australian retail - said it was the analysis of the cost of getting products from manufacturer to the store shelf that drove the retailer's turnaround.

The message may have surprised the mostly female guests who had turned out to hear Ms Macdonald's version of how she turned Oroton from a $9.4 million loss in 2005-06 to a $9.8 million profit the following year and in March booked first-half net earnings of $15.4 million.

But after drilling the importance of "good old activity-based analysis" into her listeners, Ms Macdonald told the women what they wanted to know: yes, she got to play around with the product.

"I didn't like any of the bags when I became CEO, which was a bit of a problem, so . . . we overhauled the product range," she said.

Ms Macdonald took the helm at Oroton from Ross Lane in 2006 at the age of 36 after being called in as a consultant to help the company fix its declining earnings after a string of dud acquisitions.

The founding Lane family then controlled more than 50 per cent of the company's stock, although their stake now sits closer to 29 per cent.

Ms Macdonald's decision to sell off non-performing businesses Marcs, Morrissey and ALDO paid off, with the new owners of Morrissey last year closing the brand's four standalone stores in Sydney and Melbourne.

The indefatigable mother of three - she said she'd "like to do another one" when quizzed about the challenge of the Oroton turnaround - said the industry's next challenge was online.

She launched Oroton's online offering in late 2006 and it has booked double-digit growth each year since.

"There will always be that touch-and-feel customer, but I think it (the convenience of online) just means there's a bigger onus on retailers to have a more exciting store experience," she said. "It's giving retailers another facet to think about it."

The company will open its fifth Oroton outlet in WA in Claremont in February.

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