MENU

Take me home Country Road

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.

The Australian Financial Review says "good quality Australian shares that have a long history of paying dividends are a real alternative to a term deposit." Get "3 Stocks for the Great Dividend Boom" in our special FREE report. Click here now to find out the names, stock symbols, and full research for our three favourite income ideas, all completely free!

Motley Fool writer/analyst Mike King doesn’t own shares in any companies mentioned. You can follow Mike on Twitter @TMFKinga

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.