Australian clothing chain Country Road Ltd on Thursday revealed its swung to a full year profit despite flat sales in a tough retail environment and said it does not expect conditions to pick up in the current half.

The company posted a net profit for the 12 months to June 30 of A$2.38 million (US$1.5m) compared to a net loss of A$26.54m in the previous fiscal year when it was hit by A$25.1m of costs linked to its axing from its 20 stores in the US.

"A competitive environment and significant discounting by department stores negatively impacted sales, particularly in the second half," the retailer said.

"However, margins were increased by about 2.3 per cent through improved sourcing, reduced markdowns and favourable exchange rate movements."

Country Road last month announced plans to create 10 concept stores within the popular Myer Grace Bros stores and open 15 more of its own stores over the next two years.

At the same time it also revealed it would no longer supply department store group David Jones with its fashions.