City Chic CEO Phil Ryan told investors this week that the market creep of Shein and Temu over the last few years has created an opportunity for the plus-size fashion retailer to refocus its business model.
Speaking at the brand's AGM, Ryan said retailers across Australia are in unprecedented times, as low-cost online retailers like Shein and Temu continue to take market share.
“To put this in perspective, Shein now offers over 10,000 plus-size products at exceptionally low prices – an offer that was not nearly as strong 3 years ago,” Ryan said.
This comes amid a surge in sales over recent years for Shein, with ASIC filings showing a 20 per cent lift in the ultra-fast fashion business’s Australian sales to $1.22 billion for the year ending December 31, 2024.
This is around $220 million more than what Cotton On Group is projected to make in 2025, according to the latest data from IBISWorld, and is a third of the way to hitting Myer’s total annual sales of $3.6 billion.
In the Australian online fashion space, Shein is a key leader in terms of sales, which is ahead of Myer Group’s total online sales of $818.9 million in FY25 – that includes its owned brands such as Sass & Bide, Marcs and David Lawrence, as well as the five Apparel Brands, being Just Jeans, Jay Jays, Jacqui E, Dotti and Portmans.
The Iconic – another key leader in Australian online fashion – recorded a total sales of €357.9 million, equivalent to around $637 million in Australian dollars.
In order to combat this growing threat, Ryan said his plan over the last 12 months was to overhaul product and touchpoints to differentiate the brand from the low-price incumbents.
Ryan said the product overhaul initially resulted in a slower-than-planned intake of Australia and New Zealand Summer product, which has impacted revenue, as he and his team take their factories on the overhaul journey. He is reporting strong sell-through that is meeting or exceeding all key performance indicators.
“I have just been to China to drive these changes in our supply chain,” Ryan said. “We are setting up new structures to manage production lines and looking for factories that can deliver on our heightened expectations.
“I see this as the key part of my role in the next 12-24 months.”
In numbers, City Chic reported a 15.2 per cent lift in sales across Australia and New Zealand in the second half of FY25, and up 8.3 per cent for the full year. This has continued in the first 18 weeks of FY26, with sales up 10 per cent on PCP.
Website traffic is also booming, up 26 per cent according to Ryan.
Looking ahead, Ryan listed five key steps to driving further sales. The first involves growing comparative sales in Australia and New Zealand. Ryan said increased customer frequency will be driven through lifestyle and category improvements, alongside focused advertising and re-engaging with lapsed customers.
The second is new stores, with 6-8 expected to open in FY26. “We already have four open in the first half,” Ryan said. “We will also annualise the 6 stores opened in H2 FY25.
“We see an opportunity for up to 120 stores in ANZ.”
The third is the rollout of store-to-door across its retail network, where customers can buy from City Chic’s full online assortment directly through its point-of-sale.
“Our store teams are incentivised to drive it, and they offer to ship it to the customer for free,” Ryan said. “In only a few months; it has driven the equivalent of 5 stores volume on a weekly basis, that is incremental to in-store sales, with no additional cost. This is a huge opportunity to drive growth as we make process improvements and train the team to execute.”
The next move is building its Australian partners. This comes at City Chic joined the Myer marketplace in August, which he said is expected to drive similar to higher sales than its current AU/NZ partner, The Iconic.
“On top of this, The Iconic will annualise its growth from last year,” Ryan said.
The fifth and final move is launching on the Belk marketplace in the United States, projected to launch in the third quarter of FY26. This will add to the other US partners such as Nordstroms and Amazon.
The US market makes up 22 per cent of City Chic’s total revenue, with the market recently impacted by tariffs and the scrapping of de minimis on duty payments.
In FY25, sales of City Chic products were up 25 per cent for FY25 in the US. Website sales in the country grew 16.8 per cent, with Ryan citing material ASP increases, through both starting price increases and reductions in discounting. City Chic partner sales grew 29 per cent.
“As these initiatives annualise, I know we can deliver compounding increases in revenue,” Ryan said. “And we will also be able to identify further building blocks as we gain momentum. It’s great to be back driving revenue opportunities.”