City Chic has reported sales growth in ANZ during the first 18 weeks of the second fiscal half, but its US numbers are dropping amid volatile sentiment resulting from recent tariff announcements.
The company’s total sales for the 18 weeks ended May 4 grew 8 per cent, with the Australia and New Zealand markets up 17 per cent and the US down 13 per cent. Its gross margin remains in line with expectations.
Management said the improvement in ANZ has been lower than planned as the expected uplift from the recent interest rate cut and improved consumer sentiment are yet to materialise.
In the US, the already volatile trade and consumer sentiment has been amplified by the ongoing tariff announcements, they added.
According to City Chic, approximately 20 per cent of its revenue is generated in the US, and over 90 per cent of products are sourced from China. The group already brought the bulk of its summer and winter products into the US ahead of the tariff changes, which will help sustain operations through the next fiscal second quarter.
The group believes it will not be feasible to raise prices sufficiently to entirely offset tariffs in the US without materially impacting demand. It has lowered sales outlook in the market, but anticipates that its variable cost structure will allow the business to maintain a neutral contribution margin in the short term.
“Given the economic uncertainty and fluidity of potential tariff negotiations, it is not yet possible to provide a reliable estimate of the impact on the revenue of the US business for the remainder of FY25,” the company said.
City Chic previously expected its FY25 revenue to range from $137 million to $147 million and EBITDA of $8 million to $12 million.
Given the current market conditions in the US and the second-half trading update, the group is now targeting the lower end of this range. It noted that the results could also fall short of this target due to volatility and uncertainty.
