David Jones, Country Roads profits plunge in annual results

Two iconic Australian retailers owned by the same parent company suffered a slump in profit after a tough financial year marred by Covid lockdowns.

On Wednesday, Country Road Group posted its result for the 2022 financial year and it left a lot to be desired.

The clothing brand, which operates Country Road, Trenery, Mimco, Witchery and Politix, saw its profit decrease by 22.3 per cent compared to the same period the year before.

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

Up-market chain David Jones, which has nearly 50 stores in Australia, also took a hit though to a lesser extent.

Money generated from sales at David Jones fell by around 2.6 per cent from $2.112 billion to$2.058 billion.

Both Aussie companies fall under the ownership of South African giant Woolworths Holdings and there are rumours that they are looking to offload some of their liabilities.

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Overall, adjusted operating profit for David Jones dropped by 0.6 per cent to rest at $83.7 million.

However, a David Jones spokesperson argued that this was actually a very strong year for the clothing giant as this was the first time it 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 as online shopping accounted for 22.8 per cent of the company’s total sales, an increase of 28.7 per cent compared to previous online sales.

Like with Country Road, David Jones saw an uptick in profit and sales in the second half of its reporting season, generating 86 per cent of its profit – $52.5 million between January and June this year.

However, that might not be enough to save it.

The Australian reported that a potential sale might be in the wings.

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

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 would not comment on the rumours of a sale.

David Jones CEO Scott Fyfe acknowledged the cost of living crisis, but said this wouldn’t have a huge impact on his company.

“We believe we can face into those headwinds,” he told the Australian Financial Review.

David Jones has employed new strategies in recent months to increase sales, with news.com.au reporting that earlier this year that the retailer had utilised social media platform WeChat to tap into the Chinese market.

Meanwhile, Country Road indicated it was running its own show, saying during the presentation that the firm would “now pursue its own growth ambitions” which entailed building “on Country Road brand success and replicate it across the portfolio”.

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