Country Road, Mimco owner suffers slump in profit, with Australian brands under review

Country Road Group — the company behind the eponymous fashion label and other well-known clothing and accessories brands — has blamed the discount-drenched retail environment for its 72 per cent slump in half-year profit.

The group’s South Africa-based parent company, Woolworths Holdings, told the Johannesburg Stock Exchange on Wednesday CRG’s operating profit slumped to $14.2 million in the 26 weeks to the end of December.

Sales declined 6.2 per cent for the period and by 7.8 per cent on a comparable-store basis. This was in-line with guidance provided in January.

“The apparel trading environment in Australia and New Zealand remains significantly constrained, characterised by reduced footfall and spend and intense promotional activity,” the company said.

“Higher promotional activity to manage inventory levels and the impact of a weaker Australian dollar on input costs resulted in a 320 (basis point) decrease in the gross profit margin to 58.9 per cent.”

CRG — which is also behind brands Mimco, Witchery, Politix and Trenery — is also facing operational and cost headaches after Woolworths Holdings sold department store David Jones to Sydney private equity firm Anchorage Capital at the end of 2022. It separated CRG from David Jones last financial year.

Woolworths Holdings said CRG was now in the midst of a significant restructure to reconfigure its operating model as a standalone business.

The parent company expects the trading environment to remain challenging.

“In Australia, whilst a gradual recovery in GDP growth, alongside easing monetary policy is expected, the retail sector is likely to remain highly promotional until such time as the pressures of living costs ease,” it said, adding it would reassess CRG’s under-performing brands.