Fashion retailer (ASX: CTY) says it is on the home run, after reporting continued sales growth for the first quarter of the 2014 financial year.
Country Road CEO Iain Nairn said sales had soared by more than 54% to $234 million in the 17 weeks to the end of October, compared to the previous period. Mr Nairn says the retailer has the opportunity to grow into a significant multi-brand omni-channel presence in the southern hemisphere.
The only problem for investors is that Country Road is 88% majority owned by South African retailer, Woolworths Holdings (no relation to Australia's Woolworths), while the remaining 12% is held by Solomon Lew's private investment company, Australian Retail Investments (ARI). Solomon Lew, of course, is chairman of Premier Investments (ASX: PMV), the company behind Smiggle, Just Jeans, Jay Jays and Portmans, among others.
Last financial year, Country Road delivered a profit before tax of $56 million, up 173% from the previous year. The 2014 year is also looking good thanks to the acquisitions of Witchery and Mimco businesses.
Country Road says it expects the market to remain highly competitive, with cautious consumer and business confidence, as well as new entrants into the Australian fashion retail market including Uniqlo, Zara and TopShop. The company also faces reinvigorated competition from department store retailers David Jones (ASX: DJS) and Myer Holdings (ASX: MYR), as well as OrotonGroup (ASX: ORL) which recently entered into an agreement to take over Gap stores in Australia, and is looking to expand that business.
Foolish takeaway
Country Road would most likely be a privately held company if not for the 12% stake Solomon Lew holds. With improving performance, it's a pity investors have very little chance of acquiring any shares in the company.
