Country Road Group has attributed a hit in sales due to intense promotional activity in the market.
Parent company Woolworths Holdings has announced results for the 26 weeks to December 25, 2016.
Woolworths chief Ian Moir said Country Road, which saw sales dip 0.9% lower on the prior period, was hit by heavy discounting in the broader retail sector.
While sales at sister company David Jones grew 4%, growth was softened by the termination of its Dick Smith electronics concession.
The timing of Boxing Day sales also affected results for both David Jones and Country Road, falling into the second half of this financial year.
Adjusted profit before tax at David Jones increased by 2.9% to $105 million.
“This is a good set of results in challenging trading conditions, and we have continued to grow the top line in a very competitive pricing environment," Moir said.
"With the ongoing transformation of David Jones, some encouraging signs in Country Road and the continued success of our food and clothing offer in South Africa, we are confident of maintaining our position as the leading Southern Hemisphere retailer.”
Woolworths' broader profit before tax increased 37.9% following the sale by David Jones of its Market Street property in Sydney for a profit of $172 million.