Aussie retailer’s value plummets by 89%

The plus-sized clothing outlet City Chic Collective, which is listed on the Australian Stock Exchange, has been making moves to capture a bigger part of the $180 billion market.

But the former market darling has been hit by rough conditions amid warnings to investors it had experienced a considerable drop in revenue.

To add to its woes, it overloaded on inventory at a time when the cost of living skyrocketed meaning it was left with excess apparel and footwear it needed to offload in a market where consumers are increasingly cautious about spending.

The company has warned investors its earnings will take a hit in the coming year, which saw them scramble to dump its stock resulting in its shares diving by 31 per cent in December alone.

But things have gone from bad to worse in 2023 for its share price and City Chic said its caught in volatile trading conditions, particularly overseas as it generates 56 per cent of its sales from its US fashion business called Avenue as well as in the UK and Europe.

In Australia and New Zealand, the fashion outlet boasts 90 stores but sales have been below expectations as customers hunt out bargains.

The company previously included brands such as Miller’s and Katies but sold them off in 2018, but went on to make overseas acquisitions including the US Avenue chain, British plus-sized retailer Evans and German online marketplace Navabi.

Since pandemic restrictions lifted however the retailer has struggled after enjoying the online spending boom, with a trading update before Christmas warning overall demand for its products had slumped below expectations.

“The competitive landscape, especially in the northern hemisphere, has intensified as all businesses promote aggressively to capture the limited dollars [customers are] prepared to spend,” its CEO Phil Ryan said at the company’s annual general meeting last year.

The trading update also flagged that global revenues were down by 7 per cent compared to last year sitting at $157.1 million, which sent the shares tumbling as low as 41c, with expectations the company is set to post a loss.

However, the fashion retailer recently lured Rich Lister Brett Blundy, who is valued at $3 billion and is one of the biggest names in the Australian retail sector having previously backed Bras N Things, Lovia and Honey Burdette, to invest. His investment is worth $7.5 million.

Meanwhile some analysts believe the retailer will be fine once it stabilises its inventory but others have raised concerns about the spending crunch getting even worse and continuing to plague the company.