Country Road Group sales and earnings suffering amid workplace investigation in Melbourne
Amid sexual harassment and bullying allegations, tough trading conditions across Country Road Group have seen sales and earnings dive.
Embattled fashion house Country Road Group, which this week was engulfed with scandal around allegations of sexual harassment and workplace bullying at its Melbourne headquarters, has now revealed that tough economic conditions has drained its sales and earnings for the second half of fiscal 2024.
In a trading update to the Johannesburg stock exchange overnight Woolworths Holdings, the South African owner of Country Road Group, said the weaker Australian dollar’s impact on the cost of imported goods had significantly dented earnings for the Australian fashion house.
Woolworths Holdings did not reveal the total impact of Country Road Group’s recent sliding performance on its overall business, with the company also having extensive fashion and apparel operations in South Africa, but did say it expected its group earnings to be more than 20 per cent below that in 2023.
“Whilst costs remain well controlled across the group, the impact of a weaker top-line environment is resulting in continued negative operational leverage in our apparel businesses.
In Australia, the Country Road Group is being further impacted by inflated import costs due to a weaker Australian dollar, coupled with higher fixed costs,” it said in a trading update.
The earnings downgrade for Country Road Group comes as the fashion house has been mired in a scandal around the treatment of staff at its Melbourne HQ, with two former executives accused of improper workplace behaviour and the company forced to commission an investigation into the handling of sexual harassment and bullying allegations by staff.
On Wednesday a flagship Country Road store in South Yarra, Melbourne, was targeted by protesters from Victorian Trades Hall Council which covered its doors and windows with protest signs about the alleged treatment of Country Road Group staff and the order from Woolworths Holdings to its staff to not talk to the press about the issue.
While the Woolworths Holdings earnings drop also reflects the previous sale and profit of the disposal of Australian department store David Jones, it called out Country Road Group as a key source of financial pain for the group.
When Woolworths Holdings sold David Jones for $120m it kept ownership of Country Road Group, which owns Country Road, Trenery, Witchery, Mimco and Politix.
Country Road Group is suffering from the wider poor economic conditions impacting much of the retail sector in Australia.
This slow down seems to have particularly affected trading in the second half - both in South Africa and Australia.
“At the time of releasing our interim results, our outlook for the second half of the 2024 financial year was expected to remain challenging, considering the continued pressure on consumer disposable income from high interest rates and living costs,” it said in the update.
“Trading conditions in the second half to-date have, however, proven tougher than expected for our apparel businesses, with further deterioration in footfall and discretionary spend in both geographies.”
It comes as Country Road Group is mired in a sexual harassment and workplace bullying scandal involving former executives.
The highly-placed executives suddenly departed and the global boss flew to Australia to address staff to announce the external investigation.
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