It's on a scale much smaller than Coles, but there's a very clear lesson from the way luxury goods retailer, Orotongroup, has gone about its recovery from a near death experience last year by pursuinga determined change in strategy. The difference in size is enormous: Orotongroup is capitalised at just over 110 million with the shares hitting a new 52 week high of 2.60 yesterday, up 30c after the result, or 10 per cent.

Struggling Coles has a market cap of more than 19 billion and the shares rose yesterday on more news about the break up and sale of the company, not an interim profit that was inadequate. It took some tough decisions at Orotongroup: from selling expensively acquired brands in Aldo shoes and the clothing labels, Marcs and Morrissey, significant changes in management with long time CEO, Ross Lane stepping down and new blood appointed. But it worked with interim earnings up 52 per cent to 6.

10 million and a higher dividend. But with not having to flog discounted unwanted product from Aldo, Marcs and Morrissey, the group's retail margin improved in the half, a sign that the right decisions were made, despite the cost of more than 25 million (based on the purchase cost of the brands). For all the difference in size the end result now is that Orotongroup is at last starting to feed off the very strong retailing conditions, especially where it operates in up-market clothing and leather goods while Coles is stuck in a rut and headed for the corporate knackery.

There is significant further work to be completed, and we remain committed to driving the business to its full potential with our two core brands. Oroton remains the clear growth driver of the business overall, with stronger profitability and untapped potential. In contrast the company's old mainstay, the Oroton business, saw an impressive 21 per cent rise in like for like sales in the half and the company is expecting that to improve as the impact of discounting the disposed brands allowed more time and money to be spent on Oroton.

During the first half Oroton sold its Aldo, Marcs and Morrissey businesses, and directors said this cut 10 per cent off the continuing cost base of the company with the savings to be really felt in 2008. The board declared an interim dividend of six cents, up from five cents the previous year, earnings per share were 14.2c, so the higher dividend is well covered.

Sales revenue of 62.3 million for continuing operations, up 7.5% on LY EBIT of 9.

2 million for total operations, up 35.4% on LY NPAT of 6.1 million for total operations, up 52.

5% on LY EPS of 14.2c for total operations, up 47.9% on LY Sounds simple now but last year it looked a tough-minded but necessary approach at some cost to a lot of people, and the company.

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