Country Road profits look to soar – how is it bucking the trend?

Country Road expects its half-year profit before tax to hike by around 67-74% to $48.5-$50.5 million, appearing to defy the odds of the challenging retail climate.

The fashion and homewares retailer announced yesterday that for the period of June 30 to December 28, 2013, total sales growth was up 27.4% to $422 million, compared to $331.3 million for the same period in 2012. It spiked 6.6% in comparable terms.

Broken into territories, total sales growth in Australasia was up 27.9% from $294 million last year to $379.1 million. In South Africa, total sales growth was up 15% from $37.3 million last year to $42.9 million.

Its profit before tax for the same half-year period in 2012 was $29 million.

Brands in the group include Country Road and Trenery, as well as Witchery and Mimco, of which figures are included from late September 2012, which add to the growth.

The group has around 130 Australian stores and 67 department store concessions.

Retail Doctor Group chief executive Brian Walker says that retail has started to show signs of improvement in recent months, with good results for Christmas and Boxing Day sales.

“There is no doubt that the eight-month lag in consumer confidence is starting to come to retail,” he says.

Walker says that with the lower Australian dollar cooling international online sales, post-election political stability and good seasonal weather changes, retail is in a better place.

He says Country Road has been well placed for growth, with it providing good ranging, refocusing on its core target market and not trying to be “all things to all people”.

“When you go in to Country Road, you know what you will get…they are fashion-forward to a degree but not too far.”

He thinks they still have improvement potential with brands Mimco and Witchery.

“Mimco was quick to grow in the market…now it is in its maturing phase.

“They could continue to reinvigorate the product…more brand refinement is needed.”

Life of Style founder and stylist Connel Chiang says the group appears to have hit the “sweet spot” between price, product offer, innovation and design.

“The apparel is comfy, it is easy to wear, you don’t have to think too much about an outfit,” he says.

Chiang says the business has been consistent with the quality of its advertising campaigns.

“You know what you are going to get…but they just tweak it each time to meet market needs”, he says.

Country Road’s profit announcement comes amid a raft of international retailers entering Australia, providing added competition to Australian fashion retailers. US menswear brand Brooks Brothers, which will be operated in Australia by Oroton Group, announced its roll-out strategy earlier this week.

Iconic luxury retailer Rolex has also announced plans to open its first Australian retail store in Sydney this year.


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