Country Road, Mimco owner latest retailer to reveal brutal sales slump
Country Road Group is the latest retailer to call out tougher trading conditions due to the Iran war and rising interest rates as it records a brutal sales slump.
Country Road Group, the company behind the eponymous fashion label and other well-known clothing and accessories brand, is the latest retailer to call out tougher trading conditions amid the Iran war and rising interest rates as it records a sales slump.
The group’s South Africa-based parent company, Woolworths Holdings, revealed CRG sales suffered a 0.5 per cent decline in the second half as ongoing tensions in the Middle East and rising interest rates weighed on consumers.
CRG is also behind brands Mimco, Witchery, Politix and Trenery.
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By continuing you agree to our Terms and Privacy Policy.“While the apparel retail sector in Australia and New Zealand began to stabilise in the first half of the financial year, rising interest rates at the start of (the second half) and the ensuing Middle East war quickly impeded any further recovery, with consumer sentiment, footfall and spend, coming under significant pressure as a result,” Woolworths Holdings told the Johannesburg Stock Exchange late on Thursday.
“The sector remains intensely promotional as retailers reduce excess inventory levels.”
For the year to the end of June, CRG sales were flat at one per cent and up 1.6 per cent on a same-store basis.
CRG’s trading update came days after department store giant Myer said it had seen a sharp slowdown in sales as the perfect storm of higher fuel prices, rising interest rates and a cooling housing market forced shoppers to keep their wallets shut.
Unlike Myer, CRG had opted to sit out of steep promotions to protect margins.
“Our deliberate focus to improve the quality of sales with greater full price sales and reduced discounting, resulted in a higher second-half gross profit margin year-on-year notwithstanding the impact of higher freight costs,” Woolworths said.
“This, coupled with the reduced cost of doing business as a result of our reset operating model, saw CRG pleasingly return to full-year profitability, albeit not to the extent that was initially envisaged pre the onset of the war.”
Myer said promotions were not enough to lure in more shoppers. Its trading update on Monday showed a 5.5 per cent sales dive in June, followed by a 4 per cent slide in July.
