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Country Road Group (CRG) and David Jones have shown improved performance over the last six weeks of the half, following declines in sales during the period, parent company Woolworths Holdings (South Africa) has reported. 

Suffering from the closed Victorian stores, both CRG and sister business David Jones (DJ) experienced slips in sales, but the Cyber Weekend and easing of COVID restrictions boosted the businesses in the latter of the half, Woolworths said. 

"Early expectations of a recovery in Australia were short-lived, with the imposition of the stage four lockdown in the state of Victoria from 6 August to 28 October, resulting in unplanned store closures.  

"While this negatively impacted sales for the half, the subsequent easing of COVID-19 restrictions, together with the impact of government support on consumer discretionary spend, our successful Black Friday and Cyber Monday campaigns, and further growth in our online sales, contributed to an improved sales performance in the last six weeks of the reporting period," the business said. 

During the period, DJ's sales declined by 8.8% and by 10.5% in comparable stores. 

Meanwhile, CRG's sales over the half declined by 5.2% and by 2.4% in comparable stores, negatively impacted by the lockdown across Victoria, and in CBD and airport stores. 

However, trading looks to be improving with CRG delivering strong sales growth of 6.7% in the last six weeks of the period, underpinned by new product ranges, especially in the Country Road business. 

And, excluding the Victorian lockdown and including eCommerce, both businesses saw an increase during the period. 

The balance of the CRG business (including online) grew 8.2% in the half, while the balance of DJs plus online grew 5.9%.

The online sales for both brands grew over 50% in the half, helping to support them through the challenging period. 

DJ's online sales increased by 55.5%, contributing 17.7% to total sales over the half, while CRG saw online sales lift 52.5%, accounting for 31.6% of total sales for the period.

Other significant activity undertaken in H1 included DJ's announcement of the sale of its Elizabeth Street property to Charter Hall. 

The sale is expected to conclude in the second half, with the property to be disposed for an amount of A$510 million, with a portion of the proceeds utilised to settle debt. 

David Jones will then enter a lease agreement with Charter Hall for an initial term of 20 years, together with five options to renew the lease, each for a further term of 10 years.

Woolworths Holdings added that it will continue to optimise its rental portfolio in the DJs business going forward. 

"Whilst we are pleased with some of the progress that we have made to date, we remain steadfastly focused on the other elements of our strategic priorities including...our real estate optimisation efforts in David Jones and driving growth through digital, online and data," the business said. 

Overall, DJs reported that gross profit margin was 0.3% lower than the prior period, at 34.8%, due to higher online fulfilment costs and a higher mix of lower-margin sales, which offset reduced markdowns and promotions. 

For CRG, gross profit margin declined by 2.3% to 60% due to the impact of weaker exchange rates and additional online fulfilment costs, which were partially offset by the gains from higher full-priced sales. 

Both businesses benefitted from government support and rent relief during the half, with DJs expenses 14.9% lower than the prior period, while CRG's expenses reduced by 21.5%. 

DJ's cost-out initiatives implemented to mitigate the impact of the loss of trade also helped reduce its expenses in H1 FY21. 

Meanwhile, store closures and a reduction in discretionary spend helped CRG reduce its expenses. 

While the half proved challenging for the Woolworths Holdings businesses, the company remains cautiously optimistic going forward. 

"In Australia, economic fundamentals are stronger and more supportive of an earlier recovery in economic activity, but we are mindful that government initiatives, which have buoyed consumer spend, are coming to an end.

"We expect to conclude the sale of the Elizabeth Street property in the second half of the financial year, the proceeds of which will be used to settle debt and further strengthen our balance sheet," the business said. 

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