Cotton On has cut its store numbers after years of relentless expansion

Cotton On has cut its store numbers and forged a structural split of its fashion empire, but the Geelong-based company remains hugely profitable.

Cotton On is one of Australia’s largest retailers with a huge presence overseas. Picture: Brad Fleet

One of the nation’s largest fashion and apparel retailers, the privately owned Cotton On, has shuttered 6 per cent of its global store network, amid a slight pullback in annual sales from last year’s record high, and forged a structural split of its fashion empire.

Under a new corporate structure the Geelong-based business will be split into two business units, Cotton On and Emerging Brands, which the company believes will help it to make faster decisions for its shoppers and better respond to fast-changing consumer trends in fashion.

Cotton On, majority owned and run by billionaire Nigel Austin, also looks to have pulled back on its up until now ambitious and aggressive store expansion strategy across its key markets of Australia, New Zealand, Asia and North America as it slimmed down its store network in 2024 after opening 100 stores outside of Australia in 2023. That store expansion in 2023 represented a 15 per cent growth in its offshore store numbers.

The slight reduction in its stores, although it still operates 1370 stores around the world to be one of Australia’s biggest retailers, has come at the expense of annual sales with recent accounts for the retailer showing sales slightly down to $2.198bn for fiscal 2024 from the record high $2.215bn sales reaped in 2023.

Its Australian arm which includes the Cotton On retail brand as well as youth brand Factorie, stationery store Typo and fashion chain Supre still dominates the retailer’s operations with Australia and New Zealand sales at $1.256bn.

Its growing presence in North America where its stores are enjoying greater popularity among shoppers saw its sales there rise to $403.64m from $375.86m in 2023, to make Cotton On one of the most successful Australian retailers to make a pitch for the American market.

Sales in Asia were down around 10 per cent to $204.99m and sales in Africa were slightly down to $168.44m for the period.

The drop in sales hasn’t dented its profitability however, with its net profit for 2024 actually leaping 23.5 per cent to $20m.

A normalised net profit of $41.54m excludes non-recurring costs of $9.3m for the new corporate operating model, $3.8m of legal settlement costs and $4.8m in exit costs for stores and distribution centres.

Mr Austin began his retail career aged only 18 by selling denim jackets from the boot of a Ford Bronco at the Beckley Market in his hometown, bit since then has leapt into the nation’s rich list as a billionaire fuelled by the breakneck speed growth of his Cotton On stores and other retail banners within his portfolio that have captured a presence in most Australian shopping centres.

But in 2024 it looks like Cotton On has taken a breather to reorganise its store network and its latest accounts reveal a 6 per cent reduction in global store count to 1370 stores which its directors report says is “in line with the group’s strategic objective to optimise store formats and locations”.

Originally published as Cotton On has cut its store numbers after years of relentless expansion