Australian fashion company Country Road Group – owner of Country Road, Politix, Trenery, Witchery and Mimco – has recorded a 2.3 per cent lift in total sales for the first half of FY26, which proved softer in the last seven weeks of the period.
The bump up in sales came as an ongoing discounting war across the market impacted the group's gross margin.
A trading update shared by its ultimate parent company Woolworths Holdings Limited in South Africa confirmed that Country Road Group's gross margin for the period was down 100 basis points to 57.9 per cent. WHL confirmed that higher promotional activity and deliberate initiatives to clear excess inventory drove this slip.
“Expenses were maintained in line with last year despite the higher cost-of-doing business in Australia, supported by the successful restructure of the operating model in the prior period,” WHL reported, adding that the fashion group's adjusted operating profit was A$14.8 million, up 4.2 per cent, returning an operating profit margin of 2.6 per cent.
Alongside the 2.3 per cent lift in total sales for CRG, comparable store sales were up 2.5 per cent. WHL noted that the Country Road, Witchery and Politix brands traded ahead of the prior period, benefiting from the repositioning of the brand portfolio and a restructuring of CRG's operating model.
Following a strong Black Friday and Cyber Monday trading period in November, CRG’s December retail trading performance proved softer than anticipated. As a result, CRG's sales growth averaged 1 per cent for the last seven weeks of the period.
Net trading space increased by 0.2 per cent on the prior comparable period, with the online contribution to sales broadly unchanged at 27.2 per cent.
Country Road Group CEO Steven Cook said the result reflected deliberate trading decisions made to protect the long-term health of the business and its brands in a highly promotional market.
“We made clear and disciplined choices that strengthened our inventory position, cleared older stock through our own channels, and stayed focused on quality of sales,” Cook said. “That puts us in a more resilient position as we move into the second half.”
Looking ahead to the second half, Country Road Group confirmed its goal is to remain focused on proactive in-season trading, inventory agility and cost control, while continuing to invest in initiatives that support long-term brand relevance and operational efficiency.
“Our focus is on staying responsive and executing well against clear priorities, in a market that continues to demand discipline and focus,” Cook said.
Wrapping up the overall trading update, WHL noted that inflationary pressures in Australia and the subsequent recent interest rate hike is likely to further weaken consumer confidence in the country, tempering any recovery in Australian retail spend.
“Further, recent geopolitical events will increase the degree of uncertainty around the broader global macro outlook,” WHL added.
“Notwithstanding this context, we have clear and compelling strategies and strengthened foundational capabilities, which are already yielding positive outcomes. We expect this trend to continue and, as a result, remain confident in our ability to deliver an improvement in the Group's overall financial performance for the year.
“Furthermore, the ongoing evaluation and refinement of our capital allocation towards returns accretive investments will continue to improve our Group's overall value creation prospects and profile.”