NATIONAL: Country Road looks set for a dramatic change of direction following rumours it could soon be operating under new ownership.
According to analysis in South African daily newspaper Business Report, which was picked up on January 4 by Australia's Inside Retailing magazine, speculation is mounting that Country Road parent company Woolworths South Africa has already entered negotiations with undisclosed interested parties regarding the sale of the Australian fashion and homewares giant.
Business Report journalist Tom Robbins said the sale of Country Road was seen by analysts as a likely strategy for Woolworths, which had taken the decision to focus on its core retail business due to increasingly tough trading conditions.
While in the year to June there was evidence of a turnaround at Country Road, the Australian retailer's profit margins were way below those at the South African retail business, the newspaper added.
Business Report also quoted Abri du Plessis, chief investment officer of South African finance firm Gryphon Asset Management, as claiming an outright sale of Country Road to a foreign retailer or private equity group could not be ruled out following an announcement issued by Woolworths before Christmas.
Woolworths was expected to reduce high risk strategies due to challenging trading conditions engendered by four percentage point interest rate hikes in South Africa over the past 18 months, du Plessis claimed.
Country Road was not available for comment at the time of writing.