Plus-size retailer City Chic has reported it is on track to be operating cash flow positive in FY26.
This comes amid a striking turnaround in sales and earnings for the retailer by FY25 end, with early FY26 performance showing the swing to green is sticking.
For FY25, City Chic’s total sales lifted by 2.3 per cent to $134.7 million, with comparable store growth up 8.4 per cent in the same time frame.
Underlying earnings before interest, tax, depreciation and amortisation (EBITDA) for the retailer hit $6.4 million, up from an $8.4 million EBITDA loss in FY24.
On top of this, the retailer’s trading margin boomed by 350 basis points to 59.7 per cent, matched with a 12 per cent fall in inventory to $27.1 million. City Chic finished FY25 with a cash balance of $8 million, while $5 million remains undrawn from a $10 million debt facility.
“Delivering a $15 million turnaround to positive EBITDA in FY25 against a tough macro backdrop validates the strength of our strategy and the dedication of our team,” City Chic CEO and managing director Phil Ryan said.
“We’ve driven meaningful margin improvement and tightened our cost base, setting the stage for renewed top-line momentum and sustainable profitability.”
The company’s larger Australia and New Zealand market drove the company-wide full-year sales uplift, with a local sales rise of 8.3 per cent. The second half of FY25 was up 15.2 per cent, with Ryan saying this was driven by strong customer retention and robust traffic both in-store and online.
USA revenue from City Chic-branded product grew 25.6 per cent. However total US revenue was down 14.9 per cent to $28.9 million, with the retailer noting this was materially impacted by the Partners business, reflecting a prior period which included Avenue-branded product.
City Chic divested from its Avenue brand in 2024.
Ryan said the 25.6 per cent lift in City Chic-branded product sales came as his team collaborated with suppliers to manage the cost impacts of tariffs and keep their best sellers in stock.
“Our refreshed product ranges continue to resonate with our high-value target customers, who now represent over half of our active base, driving a 9 per cent lift in trading gross margin dollars and a 14 per cent rise in average selling prices,” the CEO added. “Disciplined cost management reduced our cost of doing business by 14 per cent to 54 per cent of sales, well on our way to our target of below 50 per cent.”
The positive momentum from the second half of FY25 continued into the first eight weeks of FY26. AU/NZ revenue is up 8.7 per cent on the prior corresponding period and the USA is “trading profitably on reduced sales”.
City Chic also reported continued improvement in its gross margin percentage and average selling prices.
The plus-size retailer is expecting economic conditions in AU/NZ to improve, with consumer confidence at a three-year high. It expects to continue growing comparative sales through further execution of its product strategy, increased customer frequency and growing its target customer base through focused advertising.
Alongside this, City Chic plans to open 6 to 8 new stores in the new year, alongside a ‘Store to Door’ initiative and Myer and American department store Belk being onboarded as partners in the first half.
The company also expects to further reduce its fixed cost base by $1 million and achieve $700,000 in annualised cost savings. The first of two required clean-downs of its debt facility was made in July 2025.
“Having turned the corner with a leaner structure and stronger foundation, we’re now fully focused on listening to our customers, delivering the product experiences they seek, and building the loyalty that drives our next phase of revenue growth,” Ryan said.