- In response to supply chain issues and COVID-19 disruptions, City Chic Collective (CCX) increased its inventory levels over the first half of FY22
- The fashion retailer said this was necessary and led to sales growth in the Americas and the ANZ market during the peak Black Friday and Christmas sales period
- Revenue over the haly-year grew nearly 50 per cent to $178.3 million which the company found pleasing as it stayed focus on its key strategies
- City Chic’s cash balance reduced nearly 46 per cent to $38.7 million and expects the ongoing investment in inventory will result in a further reduced cash position
- City Chic shares have dropped considerably by 30.9 per cent following the update to $3.49
Shares in City Chic Collective (CCX) have plummeted after the company released its interim FY22 financial results for the 26 weeks ending December 26, 2021.
The fashion retailer reported a 49.8 per cent growth in revenue to $178.3 million and said it represents constant currency growth of 51 per cent and comparable sales growth of
44 per cent.
“Our revenue growth of 49.8 per cent is very pleasing as we stayed focused on our three strategic pillars of plus size, digital and global customer acquisition. We did this through expanding the customer base both organically and inorganically while accelerating our digital growth,” CEO and Managing Director Phil Ryan said.
City Chic acquired European plus-size online marketplace Navabi in July for €6 million (A$9.4 million) and US plus-size marketplace CoEdition’s customer lists, brand and URL in December 2021.
Sales in Australia and New Zealand grew 14 per cent to $80.7 million which the company said reflects online growth. Sales in America rose 62 per cent to $77.2 million thanks to a growing customer base and CCX introducing a wider range of products and lifestyles on Avenue.com.
EMEA sales totalled $20.3 million which were impacted by ongoing supply chain and logistics challenges.
City Chic said that despite COVID-19 disruptions, such as labour shortages, supply chain issues, extended store closures etc, it still delivered a 64 per cent increase in its customer base with active customer growth across all regions and online sales growth from 73 to 77 per cent.
“I am extremely proud of this achievement and thankful for the way our team has remained committed to delivering for our customers,” Mr Ryan said.
Underlying earnings before interest, tax, depreciation and amortisation (EBITDA) came to $23.5 millon, a slight one per cent growth on the first half of FY21. Statutory net profit after tax (NPAT) fell 5.9 per cent to $12.3 million.
To proactively manage supply chain risks and to ensure there was products when consumers wanted them, City Chic focused on increasing inventory levels. Positively, this measure supported sales growth in the Americas and the Australia and New Zealand market during the peak Black Friday and Christmas sales period.
The UK and Europe regions were navigating ongoing labour and logistics issues which are reportedly a key focus in the second half.
Due to the acquisitions and strategic investment in inventory, the company’s cash balance reduced nearly 46 per cent from $71.5 million at the end of June 2021 to $38.7 million as at December 31, 2021.
The company said managing its supply chain to address the ongoing global disruptions while still trying to achieve growth will remain its focus during the second half.
“While the environment remains uncertain, the performance of the business to date demonstrates the management team’s ability to manage volatile market conditions. We are confident we are well positioned to continue to grow our business and to lead a world of curves,” Chair Michael Kay said.
City Chic shares have dropped considerably by 30.9 per cent to $3.49 at 2:55 pm AEDT.