Sales across Country Road Group have fallen by 6.8 per cent according to the latest trading update from its parent company, Woolworths Holdings Limited (South Africa).
Country Road Group manages five fashion brands including Country Road, Politix, Trenery, Mimco and Witchery.
The group’s sales also declined by 8 per cent on a comparable 52-week period and by 13.1 per cent in comparable stores.
WHL noted this should be considered in the context of a high prior-period base, in which sales grew by 12 per cent following a “strong post-COVID pent up demand” in the first half.
Sales growth in the second half at Country Road Group declined by 11.3 per cent.
“Retail trading conditions in Australia and New Zealand deteriorated further in the second half, with consumer sentiment at near-record lows and the prolonged cost of living crisis continuing to impact both footfall and discretionary spend,” WHL reported.
Despite the challenging macroeconomic backdrop, WHL added that the Country Road brand delivered positive growth for the period. Trading space increased by 4 per cent during the period through the ongoing expansion of our concession channels. The contribution from online sales increased to 27.6 per cent of total sales, supported by our leading omni-channel capabilities.
Country Road Group’s sales fall deviates from WHL’s overall group turnover and concession sales from continuing operations, which grew by 6.2 per cent and 5.6 per cent on a constant currency basis.
On a comparable 52-week period ended 23 June 2024, overall group sales grew by 4.3 per cent, and by 3.2 per cent in the comparable second half.
“Whilst the group has maintained its stringent focus on preserving gross profit margin and containing costs, we equally continue to invest behind our key strategic initiatives,” WHL reported. “This, coupled with the impact of a weaker trading environment, has resulted in negative operational leverage in both apparel businesses.
“This was particularly prevalent in CRG, which was further impacted by inflated import costs due to a weaker Australian dollar, and the business's inherently higher fixed cost base.
“Furthermore, the reassessment of the carrying value of the Politix business in CRG, has resulted in a non-cash impairment of goodwill which impacts the earnings per share for continuing operations and the Total Group.”
Country Road Group operates around 600 stores across Australia, New Zealand and South Africa.