City Chic recorded a 37% year-on-year drop in domestic web traffic over April 2023, according to analysts at investment bank Citi.
In a note to clients, analysts said the figure reflected an accelerated decline relative to March (-19%).
“Our analysis indicates that all of City Chic’s key Australian peers saw declines in web traffic in April 2023, down -26% on average.
"While the underperformance of City Chic’s Australian website relative to competitors suggests sales trends may have deteriorated since the positive trading update in February, the industry-wide decline in web traffic may be reflective of shoppers returning to physical stores (also flagged at the 1H23 result)."
City Chic reported a net profit after tax loss of $27.2 million for the first half of the financial year. The plus-size retailer reported an 8% drop in sales revenue ($168.6m) for 1HFY23 against the prior corresponding period.
City Chic CEO Phil Ryan said there was a shift in spend across key international markets at the time.
"City Chic has had a challenging first half across our key markets as consumer demand contracted, particularly in the USA and Europe. In Australia, revenue was slightly down as lower online sales more than offset strong growth in stories as customers returned to in-store shopping."
Citi analysts noted that the Kepler retail index - which uses retail in-store analytics to learn shopper behaviour and foot traffic - may not reflect the return to physical stores, “likely due to the significant traffic past stores in the pcp (+83% yoy in April 2022).”
“While shoppers may be spending more in-store as opposed to online, in our view the RBA’s (Reserve Bank of Australia) continued efforts to control inflation with a surprise rate-hike in May suggests that pressures on the consumer could persist for some time.
“The Kepler retail index suggests sales in April 2023 were -2% lower yoy. Citi continues to see another +25bp rate hike in June.”
More broadly, global web traffic for City Chic Collective has dropped by -20% in April 2023, following a -13% drop in March.
The brand's global digital portfolio includes a dedicated City Chic website in the U.S, Avenue (US), Evans (UK) and Navabi (Europe). Citi analysts noted the global drop was despite positive growth in January this year, which was up 5% year-on-year.
“This is in line with our 2H23 group sales forecast of -11%, which assumes an improvement from the -17% decline in sales reported for the first 7 weeks of 2H23. City Chic’s US websites appear to have lost earlier momentum in April but continue to outperform relative to Europe and ANZ, with traffic to City Chic US and Avenue decreasing -8% and -5% respectively.
“Europe continues to struggle, with Evans and Navabi falling -31% and -29% respectively. We note that City Chic’s websites underperformed all but one of its competitors (that we track) in terms of yoy web traffic growth in April 2023.”
City Chic operates a network of 94 stores across Australia and New Zealand and holds wholesale partnerships with retailers in North America and Europe.