City Chic Collective’s FY25: Profit Turnaround Amid ANZ Growth and US Challenges
City Chic Collective reports a promising FY25 with a return to profitability driven by strong ANZ sales and disciplined cost management, despite ongoing US market headwinds.
- Global revenue up 2.3% to $134.7 million
- Underlying EBITDA turnaround to $6.0–6.5 million profit from $8.4 million loss
- ANZ region sales grow 8.3%, with strong second-half momentum
- US revenue declines 14.9% amid trade policy volatility
- Inventory reduced by 12%, supporting fresh product assortments
A Return to Profitability
City Chic Collective Limited (ASX – CCX) has delivered a preliminary trading update for the fiscal year ending June 29, 2025, revealing a significant financial turnaround. After enduring an $8.4 million EBITDA loss in FY24, the company now anticipates an underlying EBITDA profit between $6.0 million and $6.5 million. This shift underscores the success of its transformation efforts, including cost reductions and margin improvements, despite persistent macroeconomic challenges.
Regional Performance Divergence
The company’s growth story is largely anchored in its Australia and New Zealand (ANZ) operations, where revenue rose 8.3% to $105.8 million. Comparable store sales increased 8.4%, with the second half of FY25 showing even stronger momentum at 15.2% growth. Online sales also surged by 17.8%, reflecting a positive shift in consumer engagement. However, the US market painted a contrasting picture, with revenue declining 14.9% to $28.9 million. The drop is attributed to ongoing volatility linked to US foreign trade policies, which have dampened demand and complicated inventory replenishment strategies.
Operational Efficiencies and Inventory Discipline
City Chic’s management has executed a rigorous cost-out program, reducing operating expenses from $96.5 million in FY24 to $84.4 million in FY25. These savings stem from improved labor and fulfillment efficiencies and tighter control over other operating costs. Inventory levels were also carefully managed, declining 12% to $27.2 million, positioning the company with a fresh product assortment heading into FY26. This disciplined approach has contributed to a 3.6 percentage point increase in trading margin, now at 58.9%, and a 9.1% growth in gross margin dollars.
Customer Focus and Store Strategy
CEO Phil Ryan highlighted the importance of aligning product offerings with customer preferences, noting improvements in quality and range that have resonated well with shoppers. The company’s new Wetherill Park store concept has received positive feedback, signaling potential for future retail expansion. Despite challenges, City Chic’s customer base remains loyal, with management emphasizing the need to deepen these relationships to drive sustainable growth.
Looking Ahead
While City Chic has turned a corner, the company remains cautious about the uncertain US market environment and the broader economic backdrop. The undrawn portion of its $10 million debt facility and a cash balance of $8 million provide financial flexibility as it navigates these headwinds. The upcoming audited FY25 results, scheduled for release on August 28, 2025, will offer further clarity on the company’s trajectory and the durability of its recovery.
Bottom Line?
City Chic’s FY25 turnaround sets the stage for cautious optimism, but US market volatility remains a key watchpoint.
Questions in the middle?
- How will City Chic navigate ongoing US trade policy uncertainties in FY26?
- Can the company sustain and build on its ANZ growth momentum amid changing consumer sentiment?
- What impact will the new store concepts have on overall profitability and customer loyalty?
