David Jones, Country Road profits plummet in annual results

Two iconic Australian retailers owned by the same parent company have suffered falling profits after a difficult financial year marred by Covid lockdowns.

On Wednesday, Country Road Group released its result for fiscal 2022 and it left a lot to be desired.

The clothing brand, which operates Country Road, Trenery, Mimco, Witchery and Politix, saw profit decline by 22.3 percent compared to the same period a year earlier.

Its adjusted operating profit was $120.2 million. That said, however, its sales rebounded in the second half of the reporting period as Australia recovered from lockdowns.

The luxury chain David Jones, which has almost 50 stores in Australia, was also affected, although to a lesser extent.

Money generated from sales at David Jones fell about 2.6 percent, from $2.112 billion to $2.058 billion.

Both Australian companies belong to the South African giant Woolworths Holdings and there are rumors that they are looking to offload some of their responsibilities.

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Overall, David Jones’ adjusted operating profit fell 0.6 percent to $83.7 million.

However, a spokesman for David Jones argued that this was actually a very strong year for the clothing giant, as it was the first time it had posted a profit without any government support or stimulus packages.

According to the spokesperson, online sales were a “key contributor” to the company’s performance, with online purchases accounting for 22.8 percent of the company’s total sales, up from 28.7 percent in comparison with previous online sales.

As with Country Road, David Jones saw profits and sales rise in the second half of its reporting season, generating 86 percent of its earnings: $52.5 million between January and June of this year.

However, that might not be enough to save him.

The Australian reported that a potential sale could be behind the scenes.

Woolworths acquired Daid Jones for $2.1 billion in 2014, but the retailer has reportedly underperformed every year since.

According to the publication, Goldman Sachs has been brought on board to facilitate the sale and there are reportedly at least two interested buyers.

The spokesperson declined to comment on rumors of a sale.

David Jones CEO Scott Fyfe acknowledged the cost-of-living crisis but said it would not have a big impact on his company.

“We think we can weather those headwinds,” he told the Australian Financial Review.

David Jones has employed new strategies in recent months to increase sales. News.com.au reported that earlier this year the retailer had used the WeChat social media platform to tap into the Chinese market.

Country Road, meanwhile, indicated it was running its own show, saying during the presentation that the company would “now pursue its own growth ambitions”, which involved building “on the success of the Country Road brand and replicating it across the portfolio”. .

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