Plus-size retailer is aiming for a return to sales growth in its struggling United States market, as revenue continues to remain lower in the first eight weeks of the second half of FY26
According to the Australian retailer, its US sales decline was already expected, with the group preparing for a sales relaunch in the fourth quarter of FY26. City Chic has already ordered Summer 2026 product for the US market, and projects this should be buoyed by refreshed commercial and channel plans.
This includes the transition of Amazon to a marketplace model, which the plus-size retailer reported is progressing and should provide greater control and flexibility in assortment and pricing.
The group also launched its Belk marketplace in the US in February 2026, providing expanded distribution and improving brand visibility ahead of the fourth quarter reset.
City Chic did not provide actual sales decline figures for the US in the early second half; it only confirmed that this is a decline. But, this follows a 31.4 per cent sales drop in the first half compared to the same time in FY25. Despite the sales slip, the plus-size retailer shared that the US market remains profitable.
Commenting on the first half decline in US sales, City Chic claimed this was due to a deliberate decision to reduce purchasing in response to tariff-related volatility. The lower levels of fresh inventory particularly impacted partner channel sales, which rely on new product launches.
“The evolving developments regarding tariffs, as it currently stands, would result in a 5 per cent reduction in duties for our goods entering the USA from China,” City Chic noted. “We are monitoring the situation closely, but at the moment it does not impact our current plans or timelines.
The sales slip in the US added to total revenue for the half of $69.2 million, which is down just 0.4 per cent. This was held up by strong sales growth in City Chic’s Australia and New Zealand market. Sales in AU/NZ grew 7.4 per cent.
While the company reported an overall loss from continuing operations of $3.5 million for the half, City Chic did report an 86 per cent growth in its underlying earnings before interest, tax, depreciation and amortisation (EBITDA), which hit $6.5 million.
“Trading gross margin dollars increased 10.1 per cent for the half, with trading margin up 1.3 percentage points versus last year and 6.4 percentage points versus two years ago,” City Chic reported. “Margin expansion was driven by improved full-price sell-through and a disciplined approach to promotional activity.”
City Chic CEO and managing director Phil Ryan told investors that disciplined execution against its strategy delivered profitable growth and positive operating cash flow in the half.
The company ended the half in a net cash position of $5.4 million, an increase of 84 per cent compared with June 2025. During the period, City Chic repaid $5 million of borrowings. The $10 million debt facility remains fully available and was undrawn as of the first half of FY26, with all FY26 clean‑down requirements reportedly met.
The facility has also been extended on the same terms through to March 31, 2028.
“Our successful focus on brand elevation, high-value customer engagement and margin discipline has put us back on a pathway to sustainable growth,” Ryan said. “ANZ momentum was a standout, with 10.1 per cent trading gross margin dollar growth and high-value customers now making up 58 per cent of the active base.”
Ryan added that the positive trajectory in ANZ continued in the first eight weeks of the second half, which also included a 17 per cent lift in trading margin compared to the same period last year.
While trading for the period to date delivered year-on-year growth in ANZ, City Chic added that the performance continues to be impacted by macroeconomic pressures and softer consumer sentiment, impacting demand.