Bumper profit, revenue, dividend for Geelong-born Cotton On leaves it primed for growth

Cotton On is charged to further expand its multi-billion-dollar operation after an astonishing financial result. The result also lays bare a mammoth donation and dividends for its key players. See where the money is going.

Cotton On North Geelong headquarters. Picture: Alan Barber

Geelong-born retailer Cotton On’s gangbuster 2021-22 financial result, headlined by after-tax profit of $114.2m, will arm the global outfit for further store and staff expansion, an experienced retail analyst says.

The company’s core operation remains in Australia and New Zealand where its retail sales revenue more than doubled from $580.5m in 2020-21 to $1.2bn in 2021-22.

Cotton On founder Nigel Austin at the Geelong Cup in 2018.

Cotton On chief executive Peter Johnson, left, and Cotton On chief financial officer Michael Hardwick. Picture: Alison Wynd

Cotton On’s North American business is also booming with $335m in retail sales revenue recorded last financial year, according to a report its parent company, COGI, lodged with the corporate regulator ASIC this month.

*MORE COTTON ON NEWS: HUGE WORKER NUMBER COTTON ON WANTS FOR SUMMER**

In Asia, the group’s 2021-22 sales revenue hit $206m. In Africa sales reached $200m.

Cotton On’s operation now reaches into Namibia, Botswana, Thailand, South Africa, New Zealand, Brazil, Canada and Singapore.

Cotton On's global network of stores stretches to South Africa, North Amercia and Asia. Picture: Cotton On

In 2021-22 Cotton On gave more than $20.8m to charity, on the back of $14.4m it donated in 2020-21, to further causes in countries where disadvantage is high.

Company shareholders, including Cotton On founder Nigel Austin and his cousin Ashley Hardwick, shared a $56.48m dividend.

Cotton On gangbuster result fuels speculation

Reflecting on the Cotton On results, one knowledgeable business source said: “Not only has Cotton On’s revenue gone up by $527m but they’ve also more than doubled their net profit which means the business is going gangbusters.”

Cotton On took on a further $45m in debt in June after it refinanced its previous $215m loan.

Consumer Behaviour Professor Gary Mortimer, who has analysed the retail sector for 12 years after working in retail management for 25 years, said Cotton On could use its financial position to break into new markets.

“If there’s been a consistent period of sustained growth, you’d imagine you would see more stores open and therefore more team members employed, and potentially an expansion of support office teams,” Prof Mortimer, who works at Queensland University of Technology’s business school, said.

“Cotton On are focusing on a value-seeking consumer... despite the fact we’ve got (increased cost of living pressures) consumers are looking to buy reasonably fashionable clothing. Cotton On answers that gap in the market place.

“They’ve got a really strong Cotton On Kids offering which probably takes some of the market from the old Pumpkin Patch business that was around a few years ago.”

Mr Austin and Mr Hardwick, both company directors, wrote in COGI’s 2021-22 financial report the business had defied Covid interruptions.

“The group’s omni-channel capabilities, and the strength of its customer loyalty program has enabled it to pivot between channels to meet customer demand through home delivery and click and collect,” they wrote.

Prof Mortimer predicted discretionary retail spending in Australia would slow in 2023 as cost of living pressures bite.

But retail spending was up 16 per cent nationwide in August 2022, compared to a year earlier.

Global reach but nerve centre remains in Geelong

Cotton On North Geelong headquarters. Picture: Alan Barber

Cotton On’s entire workforce across the global has hit 18,000 people, and in August the company employed 1,429 full-time equivalent staff in the Barwon region, according to City of Greater Geelong data.

Cotton On is a sponsor of the Geelong Football Club. Premiership player Tyson Stengle in Cotton On sponsored Cats gear. Picture: Alan Barber

COGI’s financial report shows the Cotton On Foundation gave $20.8m to charity in the year to June.

Mr Austin and Mr Hardwick wrote in the report: “The group is committed to doing good in everything we do, including our ethical sourcing program and sustainability efforts.”

A separate Cotton On Group publication, titled The Good Report 2021, details its foundation used the money in 2021 to:

– SUPPORT healthcare and quality education by creating student pathways;

– Partner with UNICEF to deliver more than a million Covid vaccines in third world countries;

– EXPAND its Africa Cotton project into Mozambique to support farmers and their families; and

– DEVELOP personal and professional skills of 1200 factory workers in Bangladesh.

Succeeding in America when others haven”t

Prof Mortimer said Cotton On bucked a trend that saw some Australian clothing retailers struggle in North America.

“We’ve certainly seen retail Australian businesses that haven’t made it in the US, (activewear producer) Lorna Jane and Country Road for example.

“Clearly Cotton On’s position around on-trend basics... seems to also resonate quite well with the US consumer.”

One time Geelong Cats worker Ben Waller turned Cotton On worker in 2020 at its Avalon distribution centre.

COGI’s entities include Cotton On International, the Cotton On Clothing Trust, Cotton On Body and trusts for Cotton On Kids, Factorie, Rubi Shoes, Typo, T-BAR, Supre Holdings and Supre NZ.

Cotton On’s empire has grown from two stores in 1991 to more than 1400 stores in 22 countries.

Although a private company, Cotton On’s success, with revenue exceeding $100m in 2021-22, means it is compelled to lodge accounts with ASIC.

The Geelong Advertiser approached Cotton On to comment on its financial result but it declined.

Originally published as Bumper profit, revenue, dividend for Geelong-born Cotton On leaves it primed for growth