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A strong holiday trading period in Australia and New Zealand has helped soften the sales downturn for City Chic Collective (ASX: CCX) in the first half of FY25 with the fashion retailer’s in-store and online sales trading above expectations.
Unaudited figures released by the group point to a 3.6 per cent fall in revenue to $69.5 million compared to a year earlier.
However, the group is targeting a trunaround in underlying earnings from the red and into the black thanks to improved margins.
An upswing in trading at the end of 2024 helped the group deliver a 2.8 per cent increase in sales in Australia and New Zealand (ANZ) over the first half. Sales revenue for the last six weeks of the year spiked 9 per cent higher in ANZ compared the same time in 2023.
However, the ANZ gains were offset by a 22.4 per cent fall in sales in the Americas, despite a slight improvement in conditions over the last six weeks of the year.
The Americas division was impacted by the exclusion of Avenue-branded products from Partner revenue with City Chic revealing that its own branded products in the US delivered 25 per cent growth in the half year. The company says this momentum has given it confidence that it can “deliver the growth required in the second half”.
“We are very pleased with the turnaround in the group’s earnings, with the continued business moving from a loss of $4.4 million in the first half last year to an expected EBITDA of between $3 million to $4 million in the current period,” says Phil Ryan, the CEO of City Chic.
“This outcome reflects a combination of the recovery in the ANZ business, improved trading gross margins and the significant cost savings achieved, with further cost savings to be realised in the second half.
“The ANZ recovery is particularly pleasing as this was one of our key strategic priorities leading into FY25.”
City Chic, which markets plus-size fashion for women, generates most of its revenue from the Australian and New Zealand markets. In the latest half year, the company posted sales of $55.3 million for the region, while the US accounted for $14.2 million in sales.
Online revenue of $35 million is up 3.6 per cent from the previous corresponding period and accounts for more than half of the group’s total sales of $69.5 million in the first half.
“Our store and online business built strong momentum leading into the holiday period and delivered robust results from Black Friday through to the Christmas and Boxing Day trade,” says Ryan.
“We expect this momentum to continue into H2. Additionally, our new summer product has been well-received and the increase in sell price has contributed to materially stronger margins.”
Ryan says City Chic has the team in place to drive a continued recovery in the ANZ region and for “unlocking the opportunity we see in the USA business will become my primary focus”.
“While US online performed largely in line with last year, the improvement in the US Partner business fell short of our expectations,” he says.
“However, the 25 per cent growth in City Chic-branded products through our websites and partners at materially higher gross margins highlights the opportunity for our brand in the market.
“With an enhanced summer range and broader City Chic assortment in market, we expect this momentum to continue. Realising the full potential of the USA business is now my top priority in the second half of FY25 and into FY26.”
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