Plus-size retailer City Chic has seen an 11 per cent lift in its total gross margin dollars for the first 20 weeks of FY25.
City Chic CEO Phil Ryan confirmed the news during the company’s AGM today, adding that City Chic’s trading margin is above 62 per cent - 8.9 basis points higher than last year.
The latest results follow a tumultuous 2023 and 2024 when the plus-size fashion business divested from Evans in the United Kingdom and its Avenue business in the United States, downsizing to its core City Chic model across the United States and Australia - with Australia making three-quarters of total revenue.
Following this, and recent shifts across product ranges and rightsizing inventory levels, Ryan said the team has right-sized the business for the current demand.
“In the first 20 weeks of FY25, the positive momentum we saw in H2 FY24 has continued, as the strategy delivers a further uplift in gross margin dollars and a material uplift in average selling price of 32 per cent,” Ryan said.
“Our focus on new product, that the customer is demanding, and strong marketing campaigns with a refreshed tone of voice are working.”
The lift in margins comes despite a 4.8 per cent fall in revenue across all markets and channels, which Ryan said is an improvement on the 9.9 per cent fall recorded in the first eight weeks of FY25.
Australian revenue is up on the prior corresponding period and “in line with expectations”, and comp stores in the country are up 7.5 per cent.
“We have focused on our stores recovery and are seeing material improvements in per-store revenue and profitability; however, they still have a way to go to return to acceptable per-store sales,” Ryan said.
Ryan added that AU/NZ online sales have recovered in the first 20 weeks with revenue in this channel 3.4 per cent above last year, alongside a materially higher gross margin up 13.1 basis points on the same time last year.
“The recovery of the customer in this channel has been very pleasing given the volume of discounting over the last 18 months. This shows the strength of the brand especially with product improvements,” Ryan said.
“Traffic, in the first 20 weeks is up 20 per cent in Australia as we implement our brand refresh, new tone of voice and focused marketing efforts on the high-value customer.
“Conversion is more challenging due to cost-of-living pressures however this will come back. There is an opportunity for ANZ in the second half of FY25 as we start to cycle much easier comparative sales in both channels.”
In the USA - where City Chic operates online only - margin dollars are flat for the 20 weeks.
“September and October were below expectations, however we have seen a rebound in November post the election. Demand in the immediate lead-up to the critical holiday period has shown momentum in both ANZ and the USA.”
Looking ahead, Ryan said the key focus for City Chic is to focus on demand through reacting to customer-led learnings around product, in season, which its “more reactive supply chain facilitates”.
“We can make money at the current sales levels,” Ryan said. “Then as we recover revenue in FY25 and beyond there is significant upside. The cash position of the business is strong with over $10 million net cash today and a $10 million facility available.”
With this, City Chic is expecting its FY25 revenue to hit somewhere between $142-$160 million, with earnings before interest, tax, depreciation and amortisation (EBITDA) to be between $11-$18 million.
This is above the total revenue for City Chic in FY24 of $131.6 million, with EBITDA then at a loss of $8.4 million.