City Chic Collective has reported another poor sales performance as the company conducts a strategic review to return to profitability.
Following a period of sustained growth since 2019, Australian women’s fashion company City Chic Collective has reported a 15.2 percent drop in global YTD group sales for the first 45 weeks of the year. However, City Chic believes that it will still achieve a positive cash position by the end of FY23.
The company, which operates across Australia, USA, UK, Europe, the Middle East and New Zealand boasts a network of stores across ANZ with plus-size fashion products available globally on its websites as well as through third-party marketplace and wholesale partners across a variety of brands under the City Chic Collective umbrella.
Group sales for the 45 weeks to 14 May 2023 are down 15.2 percent to $262.2m compared to the pcp but up approximately 16.4 percent on FY21. January and February saw revenue decline 17 percent against the pcp with increased promotional levels in line with competition and as City Chic doubled down on discounting to get rid of excess stock and increase sales in areas such as the UK.
Its online channels recorded a 23.2 percent drop in YTD sales to $182.5 million compared to FY22, but are up 12.7 percent on FY21. Its store network saw $53.5 million in sales, up 6.2 percent from last year.
“Operating conditions have remained challenging, resulting in the continuation of strong promotional activity across the market,” said Phil Ryan, Chief Executive Officer and Managing Director of City Chic. “We responded to drive demand and clear excess inventory lines, focusing on converting inventory into cash while reducing costs. After the disruption to our supply chain in March it is pleasing to see revenue improving through April and May especially in the US.
“The strategic review will build on the actions we’re taking to strengthen our balance sheet, streamline our operations globally to return to a more agile operating model, improve margin and logistics as a percentage of revenue and reduce our cost base to return to profitable growth. I look forward to reporting on the outcomes of the review as we look to return to a position of strength for our shareholders and other stakeholders.”
In order to return to profitable growth, the company is undertaking a strategic review which will see City Chic further focus on its ‘inventory unwind’ by driving promotional activity and discounting. To date, as part of its strategic review, City Chic has closed seven warehouses with two further closures due in the next 3 months. And the transition to a state-of-the-art automated 3PL facility in the USA was completed in March. These initiatives are expected to deliver annualised savings of $10m, helping combat inflation and return fulfillment costs to 19-20 percent of sales.
Following the release of the trading update, City Chic stock plummeted by more than 10 percent. Over the last year, the company has lost 86 percent of its stock value.
The ecommerce landscape is changing. With a Power Retail Switched On membership, you get access to current e-commerce revenue and forecasting, traffic levels, average conversion rate, payment preferences and more!