City Chic sales higher with move into US

City Chic online penetration now at 65 per cent of total sales.

City Chic decided to skip a final dividend to preserve cash.

Women’s fashion retailer City Chic has posted a 39.6 per cent slide in full-year net profit to $9.657m as its accounts showed the impact of the divestment its Noni B business in 2018, with the retailer quickly expanding into the US and growing sales strongly in 2020.

The company said full-year sales were up 31 per cent to $194.5m with like for like store sales better by 0.4 per cent.

City Chic decided to skip a final dividend to preserve cash.

City Chic continues to have one of the highest proportion of sales coming from online, with online penetration now at 65 per cent of total sales, up from 44 per cent in 2019, and the recent burst in online shopping during COVID-19 driving its digital sales.

The company reported underlying EBITDA of $26.5m, up 6.6 per cent.

Store closures in Australia and New Zealand because of COVID-19 saw sales fall by 4.8 per cent in those regions with sales growth of 9.9 per cent in the first half followed by a 21.5 per cent slide in the second half.

The recent purchase of Avenue in the US help push up North American online sales to $65.2m against $10.7m in 2019.

City Chic is also looking to greatly expand in the US.

Last month the retailer, known for its plus-sized fashion retail chains of City Chic locally and Avenue and Hips & Curves in the US, said it had made a leading $US16m bid for the online assets of US-based Catherines from Ascena Retail, which had filed for Chapter 11 bankruptcy.

City Chic chief executive Phil Ryan said he was pleased with the retailer’s performance during the year despite the challenges of COVID-19, with the fashion chain becoming a global business through its online platforms.

“Following the acquisition of Avenue in October 2019, our online channels now represent two-thirds of our global business. In the past twelve months we have grown our active customer base by 278,000, We also expanded our product offering into the everyday fashion category with Avenue and launched an intimates and playwear brand Fox & Royal which was developed from our acquired Hips & Curves brand.

“Our focus is on leveraging our offering across channels and regions as we continue to scale our business globally.’’

He said City Chic’s USA website’s strong growth momentum in the first half slowed however, and gross margins were heavily impacted in the second half due to COVID-19 and the drop in demand for City Chic’s major dress category in the US.

In fiscal 2020 gross profit margin of 48.1 per cent was down from 57.8 per cent, reflecting the material shift in channel mix to online and inclusion of the Avenue business as well as higher levels of discounting through the COVID-19 period.

Underlying cost of doing business fell to 34.4 per cent of sales from 41.3 per cent driven by greater contribution of the lower cost online channel including Avenue as well as cutting administration costs.