Plus-size clothing specialists City Chic Collective (ASX: CCX) has completed its departure from the US market having settled its divestment of its Avenue business to FullBeauty Brands, ending a troublesome period where marketing tailwinds were curbed by the pandemic and rise of online shopping. 

This strategic divestment is part of a business restructure by City Chic, announced last month, to focus on its core customer base in Australia and New Zealand.

The sale was valued at approximately USD $12 million (approx AUD $18 million), with all conditions satisfied, allowing for a smooth transition of Avenue to FullBeauty Brands.

While the sale addresses some of City Chic’s cash flow issues, addressing their debt situation is still a key priority to turning the business around. Subsequently, City Chic’s lender agreed to restructure the Company’s debt facility, introducing a USD $10 million multi-currency facility with an extended maturity date to December 2026. This financial manoeuvre is part of a broader restructuring effort to fortify the company’s financial foundation amid declining sales and profitability.

The divestment comes as City Chic contends with a challenging market environment. The Company has reported a forecasted 30% drop in sales for FY24, bringing expected revenue to $187 million, inclusive of Avenue. Moreover, the FY24 forecasted Pro Forma Adjusted EBITDA from Continuing Operations (excluding Avenue and Evans) indicates a projected loss of $9.3 million. These figures highlight the pressing need for City Chic to recalibrate its business strategy and streamline operations of the Company that is best known to consumers seeking plus-size clothing that is both fashionable and affordable. 

Seeking capital from shareholders, City Chic currently has an Entitlement Offer currently open to eligible shareholders who can purchase 1 new CCX share for every 2.04 CCX share they hold at an Offer Price of $0.15 per New Share. 

City Chic is hoping to raise $8.4 million, of which $2.9 million is underwritten by Canaccord but may struggle if CCX shares continue trading at their current price of $.125.