Country Road Group had its worst financial year ever and job cuts are coming, chief executive Raju Vuppalapati warned its workers on Wednesday.
He told staff at its Melbourne headquarters that the company – whose brands also include Trenery, Mimco, Witchery and Politix – is facing a “perfect storm” of challenges and that profits are plummeting.
But it was the way the CEO started the meeting that surprised the staff.
Mr Vuppalapati began the meeting with a long “Recognition of the country” speech before describing how many of them could soon be out of work.
Country Road Group’s sales fell 13 percent last year, leading to a 66 percent drop in adjusted operating profit to $51.3 million, the company recently reported.
To reverse this trend, South Africa’s Woolworths Holdings, which owns Country Road, has been forced to undertake drastic restructuring and cost-cutting measures.
Employees were warned that the company was not “the best version of ourselves.”
“This is not who we are or our potential… and clearly the year 2024 has told us that it is time to reset our operating model,” Mr Vuppalapati told staff.
“It’s not just about costs, but about analyzing how we operate to bring financial discipline to investment.”
Fashion giant Country Road has had its worst financial year on record, the company’s chief executive told staff on Wednesday. Pictured is a woman modeling a Country Road outfit.
Insiders said news corporation that the new leadership structure will be unveiled on October 16 and new staff teams will be announced in mid-November, which is when the job losses are likely to be announced.
Staff were warned they would need a “change in mindset” as the company went through restructuring.
“We need to change our operating model, a comprehensive review of the structure, of how we work together… and ensure that all brands grow,” Mr Vuppalapati said.
The company will also examine changes in sourcing and the supply chain in a bid to get cheaper deals from suppliers.
Vuppalapati highlighted Witchery as a brand that had lost the magic that made it successful 10 years ago.
He said it and Mimco needed to return to its tradition of being a more stylistic, fashion-driven company.
Country Road Group, which is behind well-known brands such as Country Road, Trenery, Mimco, Witchery and Politix, has not only faced financial problems this year but was also rocked by a sexual harassment scandal in July.
As a result, two senior executives suddenly left the company and global boss Roy Bagattini flew to Australia to address staff and announce an external investigation into its handling of complaints.
Following this Country Road Group, a working group on “respect at work” was created.
Vuppalapati said staff surveys reported a sharp drop in morale.
“Polls say we are not the best version of ourselves,” Vuppalapati said at the meeting.
Country Road Group chief executive Raju Vuppalapati told staff in Melbourne the company needed a drastic restructuring due to falling sales.
Country Road Group’s sales fell 13 per cent last financial year, leading to a 66 per cent drop in adjusted operating profit to $51.3 million.
‘The emerging themes were trust, we need to rebuild trust, we need leaders to be visible.
“Some responses have been confronting.”
In a statement, Country Road Group said it was “embarking on a strategic business transformation plan to position itself for growth”.
“We are changing our operating model to leverage our scale, capabilities and culture as a House of Brands,” the statement said.
“This will allow us to passionately focus on delivering the best product and experiences to our customers.”