City Chic shares soar on first-half earnings, margin lift
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The news: Plus-size fashion retailer City Chic Collective has flagged a turnaround in first half earnings despite slower sales, sending its shares higher.
The numbers: The retailer said group sales revenue is expected to be 3.6% lower in the first half. However, EBITDA is likely to be between $3 million and $4 million, a sharp turnaround from an earnings loss of $4.4 million a year ago.
City Chic shares surged 25% to 12 cents in early trading on the ASX.
The context: The company's chief executive Phil Ryan told shareholders the ANZ business had a pleasing holiday period, with both the stores and online business performing above expectations.
"The outcome reflects a combination of the recovery in the ANZ business, improved trading gross margins and the significant cost savings achieved, with further cost savings to be realised in the second half," Ryan said.
Despite the improvement, Citi analysts said the retailer could struggle to meet its FY25 guidance for revenue of $142 million to $160 million and EBITDA of $11 million to $18 million.
What they said: "CCX would have to grow sales by 20% YoY in 2H25 to hit its revenue guidance, which is difficult to do if the consumer environment doesn't improve. That said, the company is in turnaround so there should be some upside from 2H24," Citi analysts said.
"CCX will have to trade very well during 2H25 across all geographies."
The sources: ASX announcement, Citi research
