City Chic reports soft sales, launches strategic review

(Source: Bigstock)

With global plus-size fashion retailer City Chic’s sales impacted by reduced promotional activities, a strategic review has been launched to find ways to improve performance.

According to a trading update based on unaudited accounts for the 45 weeks to May 14, group sales fell 15.2 per cent to $262.2 million.

By region, Australia and New Zealand sales fell 10.8 per cent to $122.1 million while its business in the Americas is down 21.6 per cent to $106.2 million.

European sales fell 8 per cent to $33.9 million with UK operating conditions deemed “exceptionally challenging” with heavy discounting needed to increase sales.

A strategic review by the business is expected to lead to reduced inventory levels through the upcoming financial year, however the company expects margins will remain soft.

Phil Ryan, CEO and MD at City Chic, said “strong” promotional activity across markets was needed as operating conditions remained challenging.

“We responded to drive demand and clear excess inventory lines, focusing on converting inventory into cash while reducing costs.

“The strategic review will build on the actions we’re taking to strengthen our balance sheet, streamline our operations globally to return to a more agile operating model, improve margin and logistics as a percentage of revenue and reduce our cost base to return to profitable growth.”

Two further warehouses will be closed in the next three months as the business migrates to a new freight forwarder. The company is also set to reassess its cost base across its channels and geographies to “better suit current economic environments”.

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