South African upscale clothing chain Country Road expects to swing into a first half profit in Australian and New Zealand after cost cutting and its exit from its US loss-making chain in January.

The company said Friday it expects its Australia and New Zealand operations to make a pre-tax profit of A$1.5m-A$2m amid an "encouraging" reversal of fortunes after it posted a loss of around A$3m in the year-ago period.

Chief executive Ian Moir said sales in the region climbed 3.6 per cent to A$101m but margins had been "adversely affected by increased promotional activity against a backdrop of high competition, significant discounting and unusually warm weather".

He added his firm had slashed its fabric suppliers to around a dozen from more than 100 and new technology was keeping better track of products through the supply chain.