Woolworths Holdings rumoured to explore Country Road sale
Iconic Australian fashion retailer Country Road, is facing financial struggles, leadership instability, and mass job losses. The Woolworths Holdings subsidiary reported a significant loss last financial year, prompting investor interest in a potential acquisition.
Transaction snapshot
Deal value: N/A
Deal multiples: N/A
Deal type: Potential acquisition under preliminary review
Investors: Industry buyers, private equity firms (not yet disclosed)
Country Road swung to a $61 million after-tax loss in FY24, despite generating over $1 billion in sales. The financial downturn has raised questions about whether the brand can be salvaged. Woolworths Holdings, which owns Country Road, Mimco, Trenery, Politix, and Witchery, has been making structural adjustments to cut costs and reposition its brands.
Industry sources suggest at least two potential buyers are conducting due diligence. This follows a tough period for Country Road, including renegotiated covenants, liquidity requirements, and cost-cutting measures driven by Boston Consulting Group. The financial strain also led to a $50 million write-down on Politix, which Woolworths originally acquired for $60 million in 2016.
Operational changes include terminating 90 of 98 IT workers, outsourcing operations, and divesting group-owned properties. Additionally, executive search firm Spencer Stuart has been engaged to find a replacement for outgoing CEO Raju Vuppalapati.
Woolworths Holdings, listed on the Johannesburg Stock Exchange, has owned Country Road since 1998. Following the sale of David Jones to Anchorage Capital Partners in 2022, Country Road remains its sole Australian investment. This stands out in Woolworths' broader portfolio, which focuses on department stores, premium groceries, and financial services.
Interest in Country Road aligns with a broader trend of international investors targeting Australian fashion brands. In 2023, Advent International acquired a majority stake in Zimmerman for up to $1.75 billion. Retail Apparel Group (RAG), owned by The Foschini Group, was previously in talks to acquire Politix from Country Road.
However, potential buyers may tread carefully. The collapse of Mosaic Brands, which owned Katies, Millers, and Noni B, has made investors more cautious. Debt financing has also tightened, pushing buyers towards asset-backed lenders like Gordon Brothers and Hilco.
