City Chic is set to restructure its investment in inventory, in a bid to free cash flows into FY23.
City Chic significantly raised inventory levels to mitigate the impact of supply chain issues in FY22, with its current inventory balance nearly tripling at $195.9 million.
City Chic CEO Phil Ryan said the retailer is focussed on unwinding the strategy and delivering free cash flow in FY23.
While net profit after tax saw a marginal increase from $21.6 million to $22.3 million in FY22, revenue grew 39% to $369.2 million.
“To support this growth and ensure sustained growth into the future, we established a sophisticated global distribution network through our own websites and a global partner network,” Ryan said.
“This included diversifying our global supply chain into new sourcing regions and investing in inventory ahead of the curve.
“This investment will unwind in FY23 as accelerated inbounding reduces and we leverage new supply chain relationships.
“This will deliver strong free cash flows into FY23 which, along with our expanded debt facility, provides good funding flexibility to execute on our growth plans.”
Operating cash flow fell from $15.2 million to negative $51.9 million for FY22.
Meanwhile in Australia and New Zealand, revenue rose by 11% despite lockdowns and online sales grew 27.5%.
Europe, the Middle East and Africa regions recorded $45.1 million in sales.
Looking forward, the retailer has reported consistent year-on-year trading for the first seven weeks of FY23 with some positive momentum in August.
City Chic expects to deliver profitable growth for the financial year, with Australia and the United State already performing above expectations.