Australia's City Chic Collective's revenue declines 15.8% in FY23

City Chic Collective Limited, a leading fashion retailer, has announced its financial results for the 52-week period ending July 2, 2023 (FY23), signalling a strategic overhaul and a return to a positive cash position despite a challenging economic landscape. Group revenue for FY23 declined by 15.8 per cent to $268.4 million, weighed down by volatile demand across its markets and necessitating heavy promotional efforts. This comes in comparison to a 7 per cent increase in revenue during FY21.

City Chic reported an underlying EBITDA loss of $24 million. Its right-sizing strategy resulted in an inventory balance of $53.8 million as of July 2, 2023, and a closing net cash balance of $10.9 million. The Group employed promotional activity and stock write-downs to achieve these numbers. Consequently, gross margin per cent of revenue fell by 18.7 points, nearly half of which was attributed to inventory adjustments, the company said in a media release.

Following a strategic review, City Chic is focused on revamping its business model to target profitability. The review led to the decision to hone in on three strategic pillars: Amplify focus on 'Her'; Revitalise Product Assortments; and Cost Reduction.

To further improve its commercial standing, City Chic sold its Evans brand and assets for $12 million, which will predominantly serve ongoing working capital needs. The board decided not to declare a dividend for FY23.

City Chic plans to continue its cost-reduction efforts in H1 FY24 and is targeting a 60 per cent gross margin and fulfilment cost below 19 per cent of revenue. The company anticipates returning to profitability in H2 FY24, following a period of aggressive inventory clearing.

Phil Ryan, CEO and managing director of City Chic, stated, "We have exited FY23 with a materially improved inventory position and have a clear strategy in place to return the business to profitability. We look forward to furthering our progress throughout the upcoming year."

ALCHEMPro News Desk (KD)