City Chic’s EBITDA Jumps 71% as ANZ Sales Rise 7.4%, US Revenue Falls 31%
City Chic Collective reports a robust 71% rise in underlying EBITDA for the first half of FY26, powered by strong ANZ revenue growth and strategic inventory management in the US despite tariff headwinds.
- ANZ revenue up 7.4% with gross margin expansion of 10.1%
- Underlying EBITDA increases 71% to $6-7 million
- US business remains profitable despite 31.4% revenue decline due to tariff-related inventory cuts
- Inventory reduced by 21%, supporting margin and cash flow improvements
- Net cash position of $5.4 million and extended debt facility to March 2028
Solid Growth in ANZ Offsets US Revenue Dip
City Chic Collective Limited (ASX, CCX) has delivered a mixed but encouraging trading update for the 26 weeks ending 28 December 2025. While group sales revenue was essentially flat at $69.2 million, a 7.4% increase in the Australia and New Zealand (ANZ) region helped offset a significant 31.4% decline in the Americas, primarily the US market. The ANZ growth was underpinned by a disciplined promotional strategy and a focus on full-price product sales, which also drove a 10.1% expansion in gross margin.
Margin Expansion and Profitability Gains
The company’s underlying EBITDA surged between 71% and 100% year-on-year, reaching an estimated $6 to $7 million. This improvement reflects not only the margin gains in ANZ but also operational efficiencies and inventory management. City Chic’s trading gross margin percentage rose 220 basis points to 62.2%, supported by a 6.1% increase in average selling price. The group’s strategy to avoid excessive discounting during key trading periods such as Black Friday and Christmas appears to have paid off, preserving profitability while maintaining customer engagement.
US Market, Navigating Tariff-Driven Volatility
Despite the Americas region’s revenue drop, the US business remained profitable, a notable achievement given the deliberate reduction in inventory prompted by tariff-related uncertainties. This cautious approach led to a 29.9% decline in partner sales, which rely heavily on fresh product launches. However, management expressed optimism about the resilience of US consumers and the strength of direct-to-consumer channels. Plans are already underway to replenish summer 2026 inventory to support a sales rebound in the second half of FY26.
Strong Balance Sheet and Cash Flow Outlook
City Chic ended the half with a net cash position of $5.4 million and no drawn debt, having fully repaid borrowings and met all covenant requirements. The company also secured an extension of its $10 million debt facility through to March 2028, providing financial flexibility. Inventory levels fell 21% compared to the prior corresponding period, a strategic move that contributed to improved cash flow. The group remains on track to achieve positive operating cash flow for the full fiscal year, a key milestone for investors.
Looking Ahead
City Chic will release its audited interim results on 24 February 2026, with management hosting a conference call to discuss the half-year performance and outlook. The company’s focus on elevating its brand, targeting high-value customers, and maintaining disciplined cost control will be critical as it seeks to sustain momentum and navigate ongoing market challenges, particularly in the US.
Bottom Line?
City Chic’s disciplined strategy is delivering stronger profitability and cash flow, but US tariff impacts remain a watchpoint.
Questions in the middle?
- How will City Chic balance inventory replenishment with tariff uncertainties in the US?
- Can the ANZ region sustain its margin expansion amid competitive pressures?
- What initiatives will City Chic deploy to revive partner sales impacted by inventory cuts?
