Country Road sale speculation still in fashion

Country Road’s flagship store in Sydney's CBD. Picture: Britta Campion

The noise about a sale of fashion house Country Road Group just won’t go away amid talk the group remains on the hunt for a new chief executive.

There’s speculation that its owner, South Africa’s Woolworths, is looking for a buyer of its fashion brands Witchery, Politix and Mimco.

Sources say it’s quite possible that the jewel in the crown, Country Road, could be part of the offering too, along with its sister brand Trenery.

Country Road has previously called on the services of Goldman Sachs, and about a year ago, there was talk that Woolworths was considering a sale.

Although well-connected industry participants have heard the speculation, they agree it would be a terrible time to sell, and some are sceptical.

Its recent result reflected tough trading conditions.

Woolworths sold its department store David Jones to Anchorage Capital Partners for about $100m in 2022, after it purchased the business in 2014 for $2.1bn.

The Australian reported last month that Woolworths boss Roy Bagattini had downplayed suggestions from analysts that Country Road would be sold, saying it had been a significant profit contributor to the company in the past and one poor year did not mean it couldn’t return to better margins. Country Road’s interim results included earnings down almost 72 per cent at $14.2m, while adjusted profit before tax sank 94 per cent to a wafer-thin $2.5m.

He said a restructure of Country Road was being accelerated.

When asked by analysts if Country Road still had a future within Woolworths Holdings, Mr Bagattini said it was not up for sale. “The question around selling … selling Country Road Group in this case naturally does come when a business underperforms. It is important to remember that Country Road Group has been a significant profit contributor to our group for many years, and a bad year doesn’t detract from the long term potential we see.”