City Chic Collective (ASX: CCX) reports a robust FY26 underlying EBITDA rise of 80%-95%, driven by strong ANZ sales and tight cost control amid a slight global revenue decline.
- Underlying EBITDA up 80%-95% to $11.5m-$12.5m
- ANZ sales grow 7.6%, USA sales fall 42.2%
- Trading margin expands to 60.6%
- Cost of doing business down 7.5%
- Inventory reduced 11.4%, $5.2m cash on hand
Strong Earnings Growth Masks Revenue Headwinds
City Chic Collective has delivered a striking jump in underlying EBITDA for FY26, expected between $11.5 million and $12.5 million, an 80% to 95% increase on the prior year. This surge comes despite a 3.1% dip in global sales revenue to $130.5 million, highlighting the company’s success in expanding margins and cutting costs amid ongoing macroeconomic challenges.
The ANZ region remains the standout performer, with sales climbing 7.6% to $113.8 million, fuelled by strong growth in both physical stores and online channels. This contrasts sharply with the US market, where revenue plunged 42.2% overall, reflecting a strategic pullback in inventory purchases triggered by tariff-related volatility. The deliberate inventory restraint in the US has clearly weighed on sales but is now easing as purchasing returns to normal levels and the summer product range gains traction.
Margin Expansion and Cost Discipline Drive Profitability
The company’s trading margin rose to 60.6%, up 2.1 percentage points from FY25, benefiting from an improved product mix and reduced promotional activity. Meanwhile, the cost of doing business fell by approximately 7.5%, thanks to operational efficiencies in marketing and labour. These savings have largely offset inflationary pressures, underscoring City Chic’s focus on disciplined cost management.
Inventory levels were tightly controlled, ending the year at $24.1 million, down 11.4% from $27.2 million the previous year. This aligns with the company’s strategy to maintain lean stock in a volatile market environment. City Chic also closed the period with a net cash position, holding $5.2 million in cash and an undrawn $10 million debt facility, providing a solid liquidity buffer through to March 2028.
CEO Highlights Customer Focus Amid Challenging Conditions
CEO Phil Ryan emphasised the company’s strategic execution and customer-centric approach despite adverse conditions such as higher interest rates and fuel prices, which have dampened consumer confidence in Australia. “Our customer base has continued to grow, and the feedback and satisfaction scores we receive month after month remain very encouraging,” Ryan said. He credited improvements in product quality and in-store service for resonating well with customers.
Looking ahead, City Chic plans to transition its Wholesale business with Amazon to a marketplace model, aiming for greater control over assortment and pricing. The company is confident that its focus on product and customer experience will support sustainable sales growth and profitability over time.
Bottom Line?
City Chic’s robust margin gains and cost cuts have powered a strong earnings leap, but US market recovery remains a key variable to watch.
Questions in the middle?
- How quickly will the US business rebound as inventory normalises?
- What impact will the marketplace model have on Wholesale revenue and margins?
- Can City Chic sustain margin expansion amid ongoing inflationary pressures?