overview
Country Road’s retail business performed well with sales increasing by 8.2% on last year. Prices continued to decline (by between 10% and 15%) and apparel unit-sales increased by 27% (2005: 30% increase), confirmation that our strategy of providing significantly improved value is working.
Wholesale sales declined significantly during the year (28% down on last year) and particularly in the second half. This was driven principally by the decision to move to a concession agreement with Myer and to reduce wholesale stock holdings. The concession agreement will give the business full price and range responsibility with complete control over the customer proposition.
Overall sales declined by 1.7% on the previous year. Margins, however, improved considerably and despite the significant reduction in wholesale sales, profitability increased. Net profit after tax for the year was A$3.3m and excluding one-off benefits included in last year’s result, profit improved by A$1.6m.
Ranges were more fashionable and better balanced and prices were reduced providing even better value to our customers. Stock availability was improved through shortened lead times and increased replenishment on performing key lines. More stores were opened (Darwin, Penrith, Parramatta and Queenstown) and, most importantly, the balance of wholesale/retail mix moved to predominantly retail.
In summary, this year saw strong performance of Country Road’s retail business and the first step towards exiting wholesale, positioning us to be a strong, dynamic and profitable retail-only business.
2007 focus
In the year ahead, Country Road will:
- open 39 Country Road concession outlets in Myer and bring to an end all wholesale operations;
- open four new stand-alone Country Road retail stores in addition to the concession outlets;
- continue the drive to provide better value to customers and seek to further increase this competitiveness; and
- further shorten lead times and drive more cost effective and efficient distribution of product.
