City Chic has recorded a net profit after tax loss of $27.2 million for the first half of the financial year.
The plus-size retailer also reported an 8% drop in sales revenue ($168.6m) for 1HFY23 against the prior corresponding period (PCP).
City Chic CEO Phil Ryan said there has been a shift in spend across key international markets.
"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."
The loss included an additional inventory provision of $19.6 million, primarily in Europe, Middle East and Africa (EMEA) markets.
In Australia and New Zealand, revenue was $79.5 million, down 3% on PCP but up 11% on 1H FY21.
Store sales were up 27% and online dropped by 19% on PCP, which reflected some store closures and strong COVID-related online trade.
The company's overall online revenue was down 21%, with demand impacted by economic headwinds, return to physical stores and post-pandemic shopping patterns.
Despite the sales drop in online, City Chic saw a 7% increase in global customer website traffic across all regions to 76.7 million visits.
It also saw its global active customer base rise 1.2% to 1.33 million; this is up 66% on 1H FY21.
Ryan said the company has recorded strong growth in its loyalty customer base.
“The connection we have with our loyal customers is as strong as ever, with returning customer numbers improving and total customer numbers steady over the last 12 months.”
As at January 1 this year, City Chic confirmed it reduced its inventory by $32.7 million to $163 million since the beginning of FY23. The company is aiming to reduce stock level to between $105 million and $115 million by year end through sales of seasonal stock and reducing forward orders.
Meanwhile, the Group’s net debt was $13.4 million with $35.5 million drawn down under its debt facility and cash of $22.1 million.
“We made good progress on our planned inventory reduction program and remain on track to being net cash positive by the financial year-end,” Ryan said.
Ryan confirmed margins were impacted by promotional activity, input logistics, fulfillment costs from reduced basket sizes and inflation-driven cost increases.
“We are targeting getting the business back to historical margins and combatting cost inflation, while right-sizing our operational footprint to support future growth.
“We are confident these initiatives will get us back to a position of delivering sustainable, profitable growth over the medium term.”
City Chic’s management team said it is driving five key focus areas towards sustainable, profitable growth.
The first is increasing margin by lowering promotional activity in line with market improvement, and lowering inbound logistics costs. City Chic said this includes retail price increases and tightening range and volumes in line with demand.
The retailer is also planning to lower fulfilment costs by consolidating its warehouses and reducing supply chain complexity. This includes rationalising 3PL facilities from 12 to four, as well as a new automated facility and reduced last mile freight costs with new partners in the USA in March this year.
City Chic will also aim to reduce operating costs and drive partnership opportunities.
This will include adding seven more partners in the EMEA region, with eBay and The Iconic showing growth in Australia and New Zealand.
City Chic Collective is a retailer specialising in plus-size women’s apparel, footwear and accessories. Its brands include City Chic, Avenue, Evans, CCX, Hips & Curves, Fox & Royal and Navabi. City Chic and CCX hold a network of 90 stores across ANZ and websites operating in the US, UK and Europe, as well as in ANZ.