Plus-size clothing retailer City Chic (ASX: CCX) has posted a 29% revenue decline for H1 FY24, citing inflationary pressures. Dwindling consumer confidence caused the Company’s sales revenue to drop to $105.8 million compared to H1 FY23’s $149.9 million. 

Online sales also remained challenging, but there were signs of improvement in stores during Q2. Going by region, revenue showed declines across ANZ (down 33%), Americas (down 26%), and Partners (down 20%), with some recovery noted in Q2, especially in full-price stores and the wholesale channel.

Chief Executive Officer and Managing Director of City Chic, Phil Ryan, said, “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. I am pleased to report that the revitalisation of our product assortment is delivering improving margin and sellthrough rates, particularly in stores. Our cost reduction measures will deliver approximately $25m in annualised savings and mitigation, exceeding our initial targets.”

City Chic Collective is a global retailer specialising in plus-size fashion, with 82 stores in Australia and New Zealand, and online operations in ANZ and the USA, as well as partnerships with third-party marketplaces and wholesale partners worldwide.

The challenging environment it faced in the first half is yet to improve. In the first eight weeks to 25 February, City Chic has seen revenue fall by 33% on PCP. Still, margin recovery and positive trading metric trends continue, with AOV (average order value) up 11% on PCP and ASP up 31% on PCP. Stores have performed well, with comparative full-price stores 6% above PCP at higher margins, but online continues to be challenging. 

Though trading conditions remain uncertain, City Chic expects to trade profitably in H2 as the Group’s marketing programs start driving traffic from returning and new customers, new season product continues to deliver margin improvement and cost reductions are realised. 

To boost savings, City Chic implemented headcount reductions and warehouse renegotiations that will continue to phase in over the next few months. The Company reported an underlying EBITDA loss of $7.5 million, down 306% on H1 FY23’s EBITDA profit of $3.6 million.

City Chic also focused on clearing inventory during Q1, which impacted trading margins. But, on a positive note, this also resulted in new and relevant products being available in ANZ through the crucial Q2 sales period. In ANZ, these new ranges had strong sell-through in Q2 at higher margins, and CCX USA products also achieved higher selling prices and improved sell-through in Q2.

City Chic’s inventory clearance resulted in an inventory balance of $39.5 million as of 31 December, down 27% from July, reflecting trading during the period and a strategic reduction in inventory intake. As per the Company, inventory levels are in a much healthier position, with a new range available in the market to support second-half trading. 

City Chic ended H1 FY24 with $3.5 million in cash following the sale of the EMEA business and working capital improvements.

The Board has decided not to declare a dividend for H1 FY24 given continued market uncertainty and its capital management priorities.