City Chic Collective’s share price has dropped by over 25% following its AGM meeting today.
The group reported a global revenue shortfall of 2% in year to date (YTD), citing influences on last year’s comparative numbers from store closures and COVID-related online trading. The latter has been particularly strong in H1 FY22, according to CEO Phil Ryan.
“However, to put that into context, the FY23 YTD performance is up 48% on FY2021, with growth in all regions and channels,” Ryan said. “The expansion into EMEA (Europe, Middle East, Asia) and partners has delivered a true global omni channel business.”
Despite the drop in revenue globally in YTD, City Chic's ANZ revenue is up 10%, driven by stores (up 56%) and online (down 11%) for the same period.
“The FY23 year to date performance of online is up 22% on the same period two years ago, and that was a strong year for online in Australia," Ryan said. "The introduction of Avenue and Evans products to the Australian market has provided the building block that has bridged the gap to last year, as online shoppers return to stores Australia wide,” Ryan continued. “We have grown our Australian customer base outlining the strength of the City Chic brand in Australia.”
Internationally, the group’s USA market was down 12% YoY, however it is up 44% on the same period in FY21.
“Our partner business and City Chic brand have shown strong growth," Ryan said. "Avenue has been the only channel we have seen declining revenue and traffic year to date, however, to give this context, we are materially up on revenue, traffic and conversion to the same period in FY21 - outlining our assortment growth and the market opportunity.
“EMEA was set for a big winter with inventory in market, however, the economic conditions have led to a sales decline of 5%. The UK has delivered demand growth and the EU a decline, with returns materially above historical trends so far this half in both regions.”
At the beginning of the AGM, Chairman Michael Kay referenced the war in Ukraine as one challenging aspect to its brand portfolio.
“The war in Ukraine grinds on with the ever-present threat of an unthinkable escalation that threatens all of us, but particularly Europe,” Kay said. “The UK and Europe seemingly face a very bleak winter with inflation, interest rate rises and energy shortages.
“The USA is also in the middle of an inflationary and rate strengthening cycle, as is Australia. The growing impact on consumer demand is being widely reported.
“It will come as no surprise to shareholders therefore that these events affecting our major markets are having, at least to some extent, a concomitant effect on our business.”
Meanwhile, regarding City Chic Collective’s channel performance globally, the first half of FY22 online was reportedly strong in all region, with Ryan indicating the collective is cycling that period with revenue decreased by 19% for YTD.
“However, if you look back two years, our revenue has grown 43% outlining the strength of our assortment and our ability to drive market share in new markets,” Ryan said.
“Partners have grown from $5.7m to $13.2m which, while very pleasing, has also been impacted by the economic conditions. Our partner strategy has shown progress not only in the USA but in the UK and Australia.
Ryan also noted that consumer engagement with the group’s websites have seen traffic flow at 78.5 million on an annualised basis until the end of week 20.
“This shows the strong connection she has with our websites and product assortment,” Ryan said. “The impact of the economic environment has been a reduction in conversion rates; however, she is still coming to our sites and is just a little hesitant to buy right now. I am sure this will turn; it is just when.”