City Chic shares soar as FY result and guidance top estimates
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The news: City Chic shares soared on the ASX after the fashion retailer beat consensus forecasts for FY24 and set higher-than-expected sales and earnings guidance for FY25.
The numbers: Shares climbed 31.7% to 14 cents by 12:25pm AEST, having shed nearly 70% over the last 12 months.
The company reported a statutory net loss of $38.4 million, extending last year's loss of $34.2 million, while sales reduced 28.3% to $131.6 million.
However, an underlying EBITDA loss of $8.4 million marked a 47.3% improvement on FY23.
City Chic said it is targeting revenue of between $142 million and $160 million in FY25, and EBITDA of $11 million to $18 million.
The context: City Chic said FY24 was a year of business transformation, which saw the company take actions to streamline operations and focus on its high-value customer base and product mix in Australia, New Zealand and the US. The year also saw City Chic divest its Avenue business to Fullbeauty Brands as part of the transformation.
The company said it saw positive momentum in its average selling price and gross margin contribution in the latter part of FY24, as inventory returned to appropriate levels and new products were introduced.
The fashion retailer also announced that its chief financial officer Peter McClelland will leave the group on 18 October, with deputy CFO James Plummer stepping in as interim CFO.
Citi analysts said the FY24 result beat expectations, with FY25 guidance "well ahead" of their forecasts. They noted that the midpoint of City Chic's FY25 sales guidance was 9% ahead of their estimates, while double-digit EBITDA guidance compared to the analysts' projections for a loss in FY25.
The sources: ASX announcement, ASX announcement, Citi research
