City Chic Collective Posts $6.4M EBITDA Turnaround, Eyes Growth with New Stores

Strong Financial Turnaround

City Chic Collective Limited (ASX – CCX) has delivered a remarkable financial turnaround in the fiscal year ended June 29, 2025. Reporting an underlying EBITDA of $6.4 million, the company reversed a significant loss of $8.4 million from the previous year. This $14.8 million swing underscores the effectiveness of the company’s strategic initiatives amid a challenging macroeconomic environment.

The group’s global sales revenue rose modestly by 2.3% to $134.7 million, buoyed by solid growth in its core Australia-New Zealand (ANZ) market and the City Chic branded segment in the USA. Comparable store sales in ANZ increased by 8.4%, with the second half of FY25 showing even stronger momentum at 10.3% growth.

Margin Expansion and Cost Discipline

City Chic’s trading margin improved significantly, rising 3.5 percentage points to 59.7%. This margin expansion was driven by a 9.1% increase in trading gross margin dollars, reflecting both higher average selling prices and a refreshed product range that resonates well with its target customers. The company also achieved a disciplined reduction in its cost of doing business by $11 million, including a 16.5% cut in labor costs and nearly 29% reduction in other expenses such as fulfillment and IT.

Inventory management was another highlight, with stock levels reduced by 12% to $27.1 million, positioning the company with a fresh assortment heading into FY26. The cash balance stood at $8 million, with $5 million undrawn from a $10 million debt facility, indicating a solid liquidity position.

Growth Outlook and Strategic Initiatives

Looking ahead, City Chic is optimistic about FY26. The company expects economic conditions in ANZ to improve, supported by consumer confidence at a three-year high. It plans to continue growing comparable sales through enhanced product strategies, increased customer frequency, and targeted advertising campaigns.

Expansion plans include opening six to eight new stores featuring a refreshed store concept that has already shown promising results in Wetherill Park. The retailer aims to grow its store network to 120 locations over the next five years. Additionally, partnerships with Myer and Belk are set to be onboarded in the first half of FY26, alongside the rollout of the 'Store to Door' initiative to boost sales volumes.

City Chic also anticipates further cost savings of $1 million in fixed costs and $0.7 million in annualized reductions, aiming to push its cost of doing business below 50% of sales. The company is on track to achieve positive operating cash flow in FY26, marking a critical milestone in its financial recovery.

Navigating Challenges

Despite the positive momentum, City Chic continues to navigate challenges such as tariff headwinds in the USA market and the need to validate the full impact of its new store concept. The USA segment saw a 25.6% increase in City Chic branded sales, though total USA revenue declined due to the exit of the Partners business and Avenue branded products.

CEO Phil Ryan highlighted the company’s focus on listening to customers and delivering product experiences that build loyalty and drive sustainable revenue growth. The FY25 results and FY26 outlook suggest City Chic is well positioned to capitalize on its leaner cost structure and stronger foundation.