Australian-born plus size retailer City Chic Collective is expecting a 29% drop in global sales revenue for the first half of FY24 to $105.9 million.
It comes amid media speculation that City Chic is preparing to sell off its North American business.
The company is predicting Australia and New Zealand revenue to hit $53.8 million in the first half of FY24, down 32% on the prior corresponding period (PCP). Comparative full price store sales have improved through the second quarter with new product introductions.
The Americas market is expecting a 26% sales decline on PCP to around $52 million. The City Chic Collective partners segment, including wholesale, was down 20% overall on PCP to around $11.5 million.
It comes as the Australian Financial Review reports offshore buyer interest in the business, particularly the retailer’s North America assets.
“There is no certainty that any of these opportunities, including any potential sale of City Chic's North American business, proceed to a binding transaction," City Chic said in a statement.
“Luminis Partners has been a longstanding adviser to City Chic on various projects. City Chic will keep shareholders informed of any material developments in accordance with its continuous disclosure obligations.”
Last year, the company divested its Evans business for £8m (~AUD$15.5m) and sold off its Europe, Middle East and Asia (EMEA) inventory via an asset sale and purchase agreement.
City Chic inventory is expected to be approximately $39.5 million at the end of H1 FY24, down 27% from July 2023, reflecting trading conditions and a strategic reduction in inventory intake.
This included high promotional activity during the second quarter in City Chic’s US market, which was also intended to drive revenue. City Chic’s trading margins in the second quarter were above Q1 and are expected to return to historical levels with the arrival of new ranges towards the end of H2 FY24.
City Chic confirmed that it has also made headcount reductions, alongside improvements in fulfilment costs and warehouse renegotiations.
City Chic expects to achieve an underlying earnings before interest, tax, depreciation and amortisation (EBITDA) loss of between $7 million and $10 million.
The group’s net cash position at the end of H1 FY24 is $3.5 million.
“The second quarter performance demonstrates the positive momentum we are seeing as a result of the strategic actions we’ve taken,” City Chic CEO and managing director Phil Ryan said.
“In the first quarter our focus was on clearing our inventory position and delivering new, relevant product to support our key trading period and we did that successfully. This is reflected in stronger sell through at improved margins in the second quarter, especially in our stores business, and we remain on track to return to profitable trading overall in the second half.
“We have further reduced our cost base and continue to streamline our business model with additional benefits to be realised in the second half. While there is still more to do, we are making good progress and expect these positive trends to continue.”