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WOOLWORTHS HOLDINGS LIMITED - STATEMENT ON COUNTRY ROAD

Release Date: 18/01/2002 08:30
Code(s): WHL
Wrap Text

Country Road today announced that it has completed a strategic review of its US operation and after considering all options, has decided to exit the US market.
Country Road has operated in the US since 1988. Whilst it has had some successful periods, it proved difficult to sustain a profitable operation in such a tough and volatile market. Over recent months trading conditions in the US have been exacerbated by the recession and worsening economic
picture, and the loss of consumer confidence after the events of September 11.
Country Road's US business will be placed in the hands of a trustee from today. Full entitlements will be paid to all US employees and we thank them for their contribution and co-operation during this difficult time. The closure of the US business will result in an approximate A$21.8million one- off exceptional charge, together with a charge of A$1.5million relating to severance and restructuring costs incurred prior to closure. This equates to a charge on consolidation in Woolworths Holdings Limited of approximately R104million and R7million, respectively, after minority interests and foreign currency translation adjustments. The R104million will have no effect on headline earnings.
The closure of the US operation will allow Country Road to focus on
countries with similar climates and in particular their core Australian markets and franchise. Only one range will be produced allowing significant cost savings but importantly ensuring greater focus on the design and delivery of that range. The move will ensure that Country Road is better placed to return to profitability.
Future international expansion will be under a new business model of
franchising. In addition to the recent franchise agreement for the Gulf States, new agreements are being considered in a number of countries in markets with climates similar to their own. Country Road will maintain control of the brand and work with franchisees that meet its strict retailing requirements.
As stated in the announcement of 14 December 2001, Country Road expected to report a trading loss, attributed to the US operation, of between A$3million and A$4million for the six months ended December 2001. That expectation remains and no revision is necessary. The company is cautiously optimistic about the remainder of the financial year and has already experienced increased wholesale orders for the men's and women's ranges for 2002. "The Board of Woolworths strongly endorses Country Road's decision to exit the US market. We are confident that the strategic decision to focus on the Australasian business and to produce a single range will result in significant cost benefits and improved ranges. We continue to believe management are taking the necessary steps in ensuring the business returns to sustained profitability.", said Simon Susman, the Chief executive officer of Woolworths Holdings Limited. END
Contact : Simon Susman : Chief Executive Officer - 083 252 5696
Norman Thomson : Acting Financial Director - 083 251 6354 Cherrie Lowe : Head of Corporate Governance - +27 21 407-3160

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