Plus size retailer City Chic Collective has recorded a 75 per cent drop in net loss to $21 million for the first half of FY24, as the company executes cost reduction and rightsizing initiatives.
Chic Chic’s financial blows also hit its net revenue, which was down 29 per cent in the half to $105.8 million.
The company has driven down its inventory by 27 per cent to $39.5 million, and has initiated headcount reductions and warehouse renegotiations which will continue to phase in over the next seven months.
City Chic CEO and managing director Phil Ryan said these cost reduction measures delivered approximately $25 million in annualised savings and mitigation.
“In the first quarter of FY24, we were focused on executing our strategy through rightsizing our cost base, optimising our inventory position and introducing new and relevant products to our markets to drive demand,” City Chic CEO and managing director Phil Ryan said.
“I am pleased to report that the revitalisation of our product assortment is delivering improving margin and sell-through rates, particularly in stores.
“Meanwhile, the connection we have with our customer remains strong, with an NPS score of 71. While cost of living pressures are impacting transaction volumes, the feedback and sell-through on our new ranges has been encouraging and our new product is expected to support our return to profitable trading”
City Chic’s Australia and New Zealand market recorded the largest revenue slip of 33 per cent to $53.8 million in the first half, with Americas down 26 per cent to $52 million amid continued promotional activity.
The overall revenue decline continued into the first eight weeks of 2024, down 33 per cent. However, City Chic noted positive margin momentum with gross margin dollars down only 16 per cent.
Comparative full price store sales were 6 per cent above the prior corresponding period at higher margins, while the plus-size business’ online channel continues to be challenging.
While trading conditions remain uncertain, City Chic expects to trade profitably in the second half as the group commences strategic marketing programs to drive traffic.
City Chic also finished the half year with a net cash position of $3.5 million, driven up by the sale of its Europe, Middle East and Asia (EMEA) business in the recent half-year period, including its UK brand Evans as well as the sale of inventory in the region.
Losses attributable to the discontinued EMEA business of $3 million resulted in a loss after income tax expense for the recent half-year period attributable to the owners of City Chic Collective Limited of negative $24 million, down from $27.2 million in the prior corresponding period.
The proceeds from the sale of Evans have been used for working capital purposes and to pay down and cancel the group’s remaining $1.5 million acquisition facility.
From August 9, 2023, the multi-currency debt facility was also amended to $20 million - from $31.5 million - and will reduce by a further $5 million at the end of June 2024.