City Chic Collective has reversed its fortunes with a $15 million EBITDA turnaround in FY25, driven by strategic restructuring and strong ANZ growth. The company eyes a debt-free 2025 close and cash flow positivity in FY26 amid cautious optimism for US market expansion.
- FY25 EBITDA swings from $8.4m loss to $6.4m profit
- ANZ revenue grows 15.2% in second half, online sales surge
- USA business profitable despite tariff challenges and divestments
- $22.3m cost reductions achieved, further $1m targeted in FY26
- Plans for debt-free balance sheet by end-2025 and positive cash flow in FY26
A Retail Turnaround Amid Uncertainty
City Chic Collective, the omni-channel retailer specialising in plus-size women’s apparel, has delivered a remarkable financial turnaround in FY25. After grappling with a challenging retail environment marked by inflationary pressures, tariff uncertainties, and fierce competition from ultra-low-cost online brands like Shein and Temu, the company swung from an $8.4 million loss in FY24 to a $6.4 million profit.
This $15 million EBITDA turnaround reflects the disciplined execution of a strategic restructuring initiated two years ago. The company’s leadership credits a sharpened focus on product quality, customer engagement, and operational efficiency for this progress.
Strong Growth in Australia and New Zealand
The ANZ market has been a key driver, with revenue growing 15.2% in the second half of FY25. Both physical stores and online channels contributed to this momentum, with online sales now representing over half of ANZ revenue. The company’s investment in targeted marketing and product revitalisation has expanded its customer base to around half a million, with more than half classified as high-value customers.
City Chic’s Net Promoter Score of 71 signals strong customer satisfaction, underpinned by improvements in product fit, fabric quality, and a refreshed store experience. The rollout of new concept stores and the innovative ‘store to door’ service, allowing customers to order from the full online range in-store, have further enhanced the brand’s appeal.
Navigating US Market Challenges
Despite ongoing tariff volatility and the strategic sale of the Avenue business, City Chic’s USA operations turned profitable in FY25. The company implemented a leaner, more variable cost structure and reduced inventory exposure, enabling it to withstand market uncertainties. Sales of City Chic products in the US grew 25%, with online partner sales surging 29%.
Looking ahead, management remains cautiously optimistic about expanding its US presence, contingent on a more stable trade environment between the US and China. The planned launch on the Belk marketplace in Q3 2026 is a key part of this growth strategy.
Cost Discipline and Financial Stability
City Chic has achieved $22.3 million in annualised cost reductions over two years, with an additional $1 million targeted for FY26. This cost discipline, combined with revenue growth, has strengthened the balance sheet. As of October 31, the company held $9.5 million in cash and had $5 million undrawn on its banking facility, with plans to be debt-free by the end of 2025 and cash flow positive in FY26.
Management acknowledges the retail sector’s headwinds and the company’s share price challenges but emphasizes the solid foundation laid for sustainable growth. The upcoming launch of a new loyalty program aims to deepen customer engagement and drive higher spending.
Outlook – Building on Momentum
With FY26 sales up 10% year-to-date in ANZ and continued profitability in the US, City Chic is focused on accelerating revenue recovery. Expansion plans include opening 6-8 new stores in FY26 and leveraging marketplace partnerships like Myer and The Iconic in Australia, alongside Belk in the US.
The company’s strategy to elevate product assortments, simplify operations, and amplify customer focus appears to be gaining traction. However, geopolitical uncertainties and competitive pressures remain risks to watch.
Bottom Line?
City Chic’s strategic reset has delivered tangible results, but sustaining momentum amid global uncertainties will be the true test.
Questions in the middle?
- How will ongoing US-China tariff negotiations impact City Chic’s US growth plans?
- Can the new loyalty program significantly boost customer frequency and spending?
- What is the company’s strategy to counter ultra-low-cost online competitors long term?