The retail company behind Country Road, Witchery and Politix has suffered a slight dip in sales in the second half of the FY26 financial year as it focused on full-price over discounting.
Country Road Group’s parent company Woolworths Holdings Limited (WHL) in South Africa confirmed that the Australian-born fashion group’s sales in the second half fell by 0.5 per cent.
“Our deliberate focus to improve the quality of sales with greater full price sales and reduced discounting, resulted in a higher H2 gross profit margin year-on-year notwithstanding the impact of higher freight costs,” WHL reported.
The South African company cited the Middle East war as the key culprit for the suffering sales, which has driven down consumer sentiment, footfall and spending through this calendar year. That followed what appeared to be a stabilising fashion sector in Australia and New Zealand in the first half.
Coupled with the reduced cost of doing business amid CRG’s operating model reset – which involved key personal exiting – WHL has confirmed that the Australian retail group has returned to full-year profitability. This comes after the group reported a full-year loss in FY25 of R1.43 billion South African Rand (~A$124.1 million). That was deeper than FY24 when this loss was down A$45.7 million.
However, WHL noted the return to profitability in FY26 is not to the extent that was initially hoped for prior to the onset of the war.
“The Country Road brand traded marginally ahead of last year, while Witchery and Politix were well up on the prior period, benefiting from the repositioning of their respective brands,” WHL reported.
“There was no material change to the net trading space or online contribution to sales compared to the prior period.”
For the full year, CRG sales have nudged up slightly by 1 per cent, and rose by 1.6 per cent ona comparable store basis.
For WHL overall – which includes its Woolworths department store chain in South Africa – group turnover and concession sales grew by 4.3 per cent for the year, which is up by 4.8 per cent on a constant currency basis.
Growth in the second half slowed, however, to 3.3 per cent – “reflecting a particularly challenging final quarter”.
“Following a good first half result, the second half ("H2") of the financial year presented a more challenging operating environment, with the war in the Middle East driving fuel prices and inflation higher, dampening consumer confidence and demand, and increasing operating costs,” WHL noted.
“This, coupled with the resumption of interest rate increases across South Africa and Australia, saw consumers increasingly prioritise promotional offerings and essential purchases.”
The same trading update from WHL also reported that the profit on the sale of the David Jones Bourke Street, Melbourne property in the prior period, which was partly offset by the inclusion of impairment of assets in both periods, has impacted the year-on-year growth rate for the current period's earnings per share (EPS).
WHL had sold the Bourke Street property in January 2025, for $223 million. This was separate to the sale of the David Jones business, with that deal initially struck in December 2022, for a price of just $100 million.
According to WHL, the impairments and profit on the sale of the Bourke Street property are adjusted for in calculating headline EPS (HEPS) and adjusted diluted HEPS (adHEPS).
“The calculation of adHEPS further reflects costs related to one-off restructuring initiatives across the group in both periods, acquisition-related transaction costs, as well as unrealised forex losses in the period compared to gains in the prior period.”
Meanwhile, WHL group CEO Sam Ngumeni has also been appointed as a member of the Treasury Committee, effective from August 1.