Country Road Group has suffered a pre-Christmas sales slump

The company behind a stable of fashion brands like Country Road, Mimco and Witchery has suffered a sales slump leading up to Christmas to add its name to a growing list of struggling retailers.

Country Road Group has suffered a sales slump in the six months to Christmas. Picture: Britta Campion

Country Road Group, whose fashion stable includes Country Road, Mimco and Witchery, has reported a sales slump in the lead up to Christmas as budget-conscious shoppers and desperate retailers discounting heavily to clear inventory casts a pall over the local retail sector.

The update to the market by Woolworths Holdings, the South African company that owns Country Road Group and its fashion brands Country Road, Mimco, Witchery, Trenery and Politix, pointed to a tougher Australian retail environment for the sales retreat and mirrors similar poor updates from other retailers.

The separation of Country Road Group from David Jones – once owned by Woolworths Holdings – has also caused operational and cost problems for the Country Road Group brands as they take on more costs.

Meanwhile, following soon after sales and profit warnings from Solomon Lew’s Premier Investments and its retail chains such as Portmans, Dotti and Just Jeans, as well as weaker sales at department store owner Myer, footwear chain owner Accent Group and jeweller Michael Hill, Country Road Group has painted a further bleak picture of the current state of retail.

It said sales for the 26 weeks to December 29 fell by 6.2 per cent and 7.8 per cent on a comparable stores measurement.

Although sharply negative, it was an improvement on the 18 weeks to November 3, which showed Country Road Group’s sales declining by 8.8 per cent and by 13.8 per cent on a comparable-store basis. There were some early signs of better sales over the key Christmas period however, including Black Friday sales, with the trade performance in the last eight weeks of the period, particularly over Black Friday, Cyber Monday and the festive season, improving over the previous eighteen weeks, with sales growth declining by a lesser 2.7 per cent on the prior period.

“The apparel trading environment in Australia and New Zealand remains heavily promotional, driven by price-sensitive consumers,” South Africa’s Woolworths Holdings said in its trading update.

Country Road Group has painted a bleak picture of the local retail sector. Picture: Britta Campion

This month, and in the lead up to reporting season, a number of retailers have warned of slowing sales and weaker earnings. Mr Lew’s Premier Investments and Myer on the same day issued a trading update to show shrinking sales and earnings, pointing to challenging retail conditions through the first half of 2025 with customers continuing to experience cost of living pressures across key markets.

In mid-January Premier said its apparel brands arm – since sold to Myer – and consisting of Just Jeans, Jay Jays, Portmans, Dotti and Jacqui E would see its first-half earnings dive by as much as $20m.

This week Accent Group, the nation’s largest shoe seller and which owns shoe stores like Hype DC and Platypus, said sales had slowed in the key months before Christmas as heavy promotions and discounting slimmed down its profit margins. Accent Group’s first-half sales missed analyst expectations.

Country Road Group is also facing rising costs and operational issues flowing from the sale of its stablemate David Jones. Woolworths Holdings sold department store David Jones for $100m in 2022 to private equity firm Anchorage, having bought the retailer for $2.1bn in 2014, and the separation from the David Jones business has seen extra costs piled onto its Country Road Group arm.

“Following the sale of David Jones in the 2023 financial year, and the successful separation of Country Road Group from David Jones in the 2024 financial year, Country Road Group is currently in the midst of a significant restructure to reconfigure its operating model and reset its structural economics as a standalone business,” Woolworths Holdings said in its trading update.

“Whilst the restructuring is on track to be completed ahead of the 2025 financial year-end, this accelerated time frame has necessitated increased internal focus during the period.

“The impact of a weaker topline, inflated import costs driven by a weaker Australian dollar and the business’ higher cost base post the David Jones separation, resulted in negative operational leverage for this business.”

Originally published as Country Road Group has suffered a pre-Christmas sales slump