Plus size womenswear label City Chic under fire for taking JobKeeper despite profit boost

An Australian plus size women’s fashion label has been urged to return millions in JobKeeper assistance after reporting a massive jump in profits.

Plus size womenswear retailer City Chic accepted millions of dollars in JobKeeper payments despite its profits ballooning more than 20 per cent during the last six months of 2020.

Releasing its interim financial results, the Australian fashion brand raked in $3.5m in wage subsidies until the end of September last year through the federal government scheme that was designed to assist businesses facing hardship to continue to pay workers.

Its acknowledgment of taking handouts comes as the company posts a net profit after tax for the first half of the 2021 financial year of $13.06m, a 24.8 per cent jump on the previous corresponding interim period.

City Chic is one of many companies during the pandemic that have gobbled up government funds and then posted significant profit rises.

City Chic is one of many companies during the pandemic that have gobbled government funds and then posted significant profit rises. Picture: Supplied

These companies include Premier Investments, which owns Peter Alexander and Just Jeans, and Accent Group, the owner of popular shoe chains Platypus and Hype DC.

However, major companies such as Dominos and Toyota Australia have publicly announced they are returning JobKeeper payments to the taxpayer after posting profits.

Labor MP and opposition Treasury spokesman Andrew Leigh is adamant businesses turning profits following the downturn should return assistance funds back to the tax office.

“Like many other retailers, City Chic has enjoyed a boom on their sales,” Dr Leigh said.

“Compared with pre-COVID times, their latest profits are up 25 per cent. Congratulations to City Chic and their shareholders, but their increased profits clearly show that they didn’t need a handout from taxpayers.

“With a million unemployed and government debt approaching a trillion dollars, the budget just can’t afford to be sending money to firms like City Chic that are increasing their profits. The chic thing to do would be for them to pay the money back.”

Opposition Treasury spokesman Andrew Leigh said City Chic should return the funds to the taxpayer. Picture: Joel Carrett/ AAP

City Chic chief executive Phil Ryan said the rise in sales was due in part to growing demand for casual wear during the pandemic, which supported spending in its key leisurewear brand Avenue.

“The more casual Avenue brand traded well in the US, and in Australia our customer-led model allowed us to quickly move to more casual product,” he said.

“Over the last two years, we have more than doubled our global active customer base to 801,000, increased online penetration from 40 per cent to 73 per cent and grown our northern hemisphere business from 16 per cent to 45 per cent of total sales.”

Domino’s Pizza announced in January it would return $792,000 in JobKeeper payments. Picture Glenn Hampson

The company has also acquired UK brand Evans, signalling its first move into the British plus size market.

City Chic was forced to close its Melbourne stores during Victoria’s extended second lockdown, which resulted in mass closures from July until October.

The group noted its US operations were still affected by the country’s ongoing COVID-19 outbreak, which has caused major disruptions to labour, logistics and consumer spending.

For the first eight weeks of the calendar year, City Chic said the company was continuing to deliver strong “positive” comparable sales growth.

City Chic was eligible for JobKeeper payments up to September 31, 2020.