Country Road Group is reducing the value of its brands Mimco, Witchery and Country Road by nearly $79 million due to sharp sales declines. This decision could lead its parent company to record its first loss in decades. As inflation and heavy discounting continue to erode profit margins, the group is finding it difficult to remain profitable despite a slight improvement in trading late in the year.
The well-known fashion retailer, owned by South Africa's Woolworths Holdings, has been hit hard by what it describes as recession-like retail conditions. Woolworths acquired the group in 2014 for more than $213 million but has now reassessed the value of its investment. As living cost pressures limit discretionary spending, the group has reported a 6.8% drop in same-store sales for the 52 weeks ending June 29.
The most significant impact has come from a $78.9 million non-cash impairment charge disclosed in the latest trading update. For context, Country Road Group’s adjusted profit has dropped by two-thirds from the previous year to just $51.3 million. This write-down eliminates nearly all of the group’s financial gains. Further financial pressure came from its earlier separation from David Jones, which previously helped share operating costs. Now, those costs fall entirely on Country Road Group.
While overall sales for fiscal 2025 fell by 5.4%, performance appeared to stabilise toward the end of the year. In the fourth quarter, same-period sales decreased by only 0.3%, supported by improved results at Country Road and Trenery. However, the group continues to face challenges ahead. Over 50 positions remain vacant at its Melbourne headquarters, and store closures are planned in key areas including Pitt Street Mall and the upmarket suburb of Armadale.
A recent restructuring effort was designed to reshape the business model and operate as a standalone entity. Even so, the transformation has come at a cost. With high interest rates and increased living expenses weakening consumer confidence, the group is working quickly to cut expenses, shut underperforming stores and adjust to a retail environment that is proving more difficult than expected.
Source: The Australian, Ragtrader, Daily Investor
