Group CEO Steven Cook has spent his first 15 months at Country Road Group pulling levers across inventory and CODB in a bid to steer one of Australia’s largest fashion groups towards profitability once more.
In conversation with Ragtrader, Cook says the group has taken full control of its inventory position after it got out of hand during and post-COVID, which in turn has helped them pull back on heavy discounting that has been plaguing the Australian fashion industry over the last few years.
Part of the control shift has allowed the group’s ‘Open-To-Buy’ (OTB) to react in season with quick response, Cook says. OTB is a retail budgeting and inventory planning strategy that tells a store or business how much money or stock it can spend on new merchandise during a specific period.
“So we no longer have these heavy drops monthly, and a lot of carryover inventory,” Cook says. “That's allowed us to really lighten up on how much we promote. So you get newness all the time, and newness within our businesses sells.”
Across the brands, Cook says Witchery is leading with OTB, with the brand holding back 40 per cent. He says this is working phenomenally for the womenswear label.
“Country road is circa 15 per cent,” he said. “If we pulled the home category out of that, it's probably closer to 20 or 22 per cent, only because home has longer lead times and is harder for quick response.
“Whilst there is still promotion, it's not as deep, and it tends to be category-specific. That's why you've seen the margin uplift in our business from a rate perspective, and it's also something that will allow us to pivot to the market.”
Across the P&L, Country Road Group saw a slight lift in sales of 1 per cent over FY26, when correcting for currency conversion. The group’s adjusted earnings before interest and tax (EBIT) hit A$2.3 million, up by $20.4 million from the prior period, with a positive EBIT margin of 0.3 per cent.
According to Cook, when the market turned in 2026 with the US-Iran war, the teams were able to pull back on inventory. He says the group’s year-end inventory came back by about $27 million.
Essentially, Country Road Group is focusing on bottom-line growth over top-line results.
Cost of doing business (CODB) was another key focus for Cook, including re-prioritising roles across the business, but also shifting the way marketing budgets are processed. Similar to the OTB strategy before, he says the group was still approving budgets for marketing across the board, and in some cases elevating them, but that management would only release the funds when the trajectory was proven.
“We're not putting the vast proportion of budget into firm branded marketing that you're locked into, but we're keeping some flexibility,” Cook explains. “So whilst there will be spend up front, it's really what we spend as we move through the season that's important.
“I think that aspect of cost of doing business is hugely important.”
The group also focused a lot on pulling back in-store fulfilment and pushing it back into its distribution centre, which he called a huge cost-saving initiative.
As Country Road Group’s EBIT hit positive territory, its ultimate parent company, Woolworths Holdings Limited in South Africa, reported that the Australian fashion group still posted a bottom-line loss, albeit in a dramatically better position than the loss last year. The group saw a loss of R250 million, or around $21 million AUD, in FY26, which was down from an R1.43 billion loss in FY25, or a loss of circa A$123.8 million.
Cook says his business focuses more on EBIT over bottom-line profit.
“Our PBT or after-tax view holds a lot of exceptionals tied to our restructuring of the business that aren't really applicable to operation, sales, or losses, hence why we are saying there is a return to profitability in FY26 from a headline perspective.”
According to the group, Witchery and Politix continued to benefit from their repositioning strategies during FY26. Witchery reported comparable sales growth of 9.5 per cent and BGP growth of 16.5 per cent, while Politix delivered comparable sales growth of 10.2 per cent and BGP growth of 8.7 per cent.
Meanwhile, Country Road reportedly showed "encouraging signs" of improvement through the second half and enters FY27 with new leadership, under Lucy Nutter, who is MD for Witchery and Country Road.
Looking into FY27, Cook holds a lot of hope despite the macroeconomic market that is getting whacked by inflation, interest rates and low consumer confidence.
Part of this will be driven by international growth, with Witchery officially expanding into the US market by launching on Nordstrom.com on October 16 with a curated range of more than 100 styles. The launch follows the Dani Michelle Edit in September and leads into the upcoming Elsa Hosk Edit in November.
He also points out that accessories and footwear categories across the group are going really strong, with Mimco tapping into its 30th year in business this year with a bit of a relaunch that Cook says has gone exceptionally well over the last six weeks.
Cook says that while the market keeps getting hit by headwinds, the key point is to never give up.
“During the Blitz in London during WWII, Harrods opened and traded every day. You need to be really strong and sturdy and really throw yourself into the face of consumer confidence issues, challenges, all of these things.”
For Country Road Group, Cook says the business is set for a better FY27. He says top-line growth hasn’t been overpromised, with more focus on profitability.
He says profitability is something they can weather through the year.
“So that is inventory control. That is cost control. It's leverage spend, so that we spend as we go versus spending up front. Those are the real key components.
“Our customer can spend; it's whether or not they choose to spend, and whether or not they choose to spend it with us, so we have to just be really bloody good at what we do, and really earn the right for someone to want to spend with us.”