Country Road Group owner glosses over workplace scandal in annual report

The South African owner of Country Road Group has glossed over the sexual harassment and bullying scandal at the retailer, referring to ‘internal pressures’ in its annual report.

Woolworths Holdings chief executive Roy Bagattini and Country Road Group chief executive Raju Vuppalapati.

The South African owner of scandal-plagued Country Road Group has glossed over the sexual harassment and bullying scandal that has engulfed the Australian retailer, simply describing the scandal as “internal pressures” in its annual report to investors.

Woolworths Holdings has also described the Australian economy as slowing and “edging close to recession” as it tries to explain to its investors the pitiful performance of Country Road that saw its sales plummet and its profits slump by two thirds.

In the report, chairman Hubert Brody briefly discussed the worsening trading for its Country Road Group business – which owns Country Road, Trenery, Mimco, Witchery and Politix – but brushed over the sexual harassment and bullying issues.

“Over this period, our Country Road Group teams faced internal pressures compounded by a slow economy edging close to recession,” Mr Brody said.

Mr Brody and chief executive Roy Bagattini did not mention the scandal directly in their annual report addresses.

Two senior executives have left the business and staff morale has taken a dive with employees believing their concerns and warnings about the behaviour of some Country Road Group managers has been ignored.

“I’d like to extend my admiration and support to the Australian business and all its people for their resilience during this period,” Mr Brody said.

In May, The Australian revealed details of the scandal that saw the two highly-placed executives depart. Global boss, Mr Bagattini, was forced to fly to Australia to address staff and to announce an external investigation into the handling of complaints at the retailer’s Melbourne headquarters.

The “internal pressures” Mr Brody referred to in the annual report, include Country Road Group staff complaining as not feeling safe at work, being offered onsite counselling and the retailer’s employees angry over not just the alleged treatment, but also the lack of action from Woolworths Holdings, and its failure to listen to complaints and act with haste to address the growing scandal.

Last week, Country Road Group chief executive Raju Vuppalapati addressed staff where he conceded the fashion house had suffered its worst financial performance in its history and demanded a total relook at its structure, new leadership teams and cutting costs – which will likely lead to job losses.

Mr Vuppalapati said this was a critical time for the company and that although the retailer was profitable in 2024, it was the “worst financial performance for the company”.

Country Road Group recently reported a 66 per cent slump in adjusted operating profit of $51.3m for the 53 weeks to June 30, as sales fell by 13 per cent.

In the annual report Mr Bagattini said the financial results for Country Road Group were “disappointing”, with trading conditions proving significantly tougher and more protracted than expected.

He laid some of the blame at the weaker Australian dollar and the recent uncoupling of the business from department store David Jones, which saw Country Road Group saddled with costs once shared with its former stablemate.

“In addition, the impact of a weaker Australian dollar on input costs, coupled with the business’s inherently higher fixed cost base and the cost dys-synergies emanating from the operational separation from David Jones, resulted in significant negative leverage.

“This was further magnified by Country Road Group’s record-high prior year base. The consequent outcome weighed heavily on the group’s overall result for the period.”

Meanwhile, a new leadership structure for Country Road Group is expected to be unveiled soon and the new staff teams by mid-November.

Redundancies are expected next month following the team restructure.