Clothing retailer Country Road Ltd has predicted that 2004 will be a good year for the company.

Chief executive Ian Moir said that, although conditions in the apparel sector were "reasonably tough," future prospects for Country Road were constantly improving.

Moir said: "We would be cautiously optimistic in terms of sales over the next six months and then, I think, we'll see a real response to the changes we have made."

Retail sales improved by 2.7 per cent in the first half of 2004, compared with last year, although total sales dropped by 6.15 per cent.

The company last year severed its connection with quality retailer David Jones, and created ten new "concept" stores within Coles Myer Ltd's Myer sector.

Moir revealed to Channel Nine's Business Sunday program that this had been a profitable move for Country Road. He said: "…we have replaced all of the business we had lost and we have done that in a shorter time period than we had envisaged - and it is all coming from Myer".

"We are only a short way into the building of our concept stores with Myer - once we can do that we can just see the business grow".