How City Chic Has Capitalised on the Plus-Size Fashion Boom

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By Published On: May 15, 20180 Comments

After confirming the sale of five of its struggling brands to Noni B Group, Specialty Fashion Group has announced its plans to use the sale proceeds to “drive growth in City Chic”.

In a statement, Specialty Fashion Chief Executive, Daniel Bracken said the offloaded brands – Millers, Katies, Crossroads, Autograph and Rivers – had been a drain on the company’s cash and profitability.

Closing a deal for $31 million, Specialty Fashion had previously turned down much higher offers to the tune of $100 million from buyers expressing interest in purchasing both City Chic and Autograph, the company’s main plus-size fashion brands. At least two known offers for these brands have been rejected.

So, why was Specialty Fashion so keen to hold onto City Chic, even after offloading all of its other retail offerings, including the Autograph brand?

In 2016, plus-size women’s clothing brands Autograph and City Chic both grew their online sales by 45 percent to account for 15 percent and 23 percent of brand sales, respectively.

City Chic has reportedly continued to be Specialty Fashion’s strongest brand, with Bracken expecting the brand to generate between $19 and $20 million by the end of 2018.

According to Specialty Fashion, the success of this brand can be attributed to both its focus on a niche fashion market that has been traditionally overlooked by mainstream retailers and its expansion into international markets.

The brand has expanded beyond its own retail offerings, with concessions in Myer and American department store chain, Macy’s, while also operating international stores in South Africa and six stores in California over in the states.

This international growth is in line with recent research from Australia Post that suggests Australian retailers need to look to international markets if they want to find success both at home and in a broader marketplace.

In the report, Australia Post revealed that 60 percent of retailers selling products online were yet to break into international sales, and were missing out on the opportunities that come with opening up to an entirely new network of customers. City Chic, on the other hand, capitalised on this opportunity fairly earlier on, which has led to greater levels of success in both the short and long-term.

The plus-size fashion market is also an area that’s experienced significant growth in the past few years, as Australian women who don’t fit into the size ‘six to twelve’ mould actively search for quality fashion in a market where the size debate has become more important than ever. Despite experiencing exponential growth, the plus size fashion industry is still largely underrepresented in Australia, which leaves more than 60 percent of Australians who are considered overweight or obese with limited choice around where they shop for clothes. City Chic is filling this void, with the company reporting that the brand “is highly profitable with significant future growth potential”, in its half-year results for FY18 report for investors.

Among those expressing interest in the purchase of City Chic was Specialty Fashion Group’s former boss, Gary Perlstein, who reportedly made an offer earlier in the year.

According to Specialty’s Chair, Anne McDonald, the interest in City Chic, and the outcome of the company’s sale to Noni B Group reflects the marketplace value of City Chic.

“We think that the market, just in the way the share price has moved today, has clearly understood the value that is in City Chic and what’s been unlocked today,” Ms McDonald said.

After announcing the sale of all of its retail brands, except City Chic, Specialty Fashion’s share price surged by 56 percent, with its market value now sitting at $114 million.

While there are no current offers to purchase City Chic, McDonald noted that “any party could come back to us”.

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