MELBOURNE, AUSTRALIA - MARCH 16: A model showcases a design by City Chic as part of the City Chic plus sized models show on day three of the 2011 L'Oreal Melbourne Fashion Festival at Federation Square on March 16, 2011 in Melbourne, Australia. (Photo by Wendell Teodoro/WireImage)
City Chic has reported a turnaround in earnings but has fallen short of its full-year guidance for both earnings and sales. The womenswear retailer, backed by investor Brett Blundy, cited ongoing tariff threats from Donald Trump as a factor that has negatively impacted consumer demand. On Monday, Chief Executive Officer Phil Ryan indicated that the anticipated boost in consumer spending, expected from recent interest rate cuts by the Reserve Bank of Australia, has yet to materialize.
The company projects global sales to reach $134.7 million for the financial year ending June 29, 2025. While this unaudited figure represents a 2.3 percent increase from the previous year, it falls short of the revised guidance of $137 million to $147 million provided in May. The forecast for earnings before interest, taxes, depreciation, and amortization (EBITDA) is estimated to be between $6 million and $6.5 million. This marks a recovery from a loss of $8.4 million in the previous financial year, though it is lower than the revised forecast of $8 million to $12 million.
Phil Ryan described the return to profitability as a significant milestone for City Chic. The retailer has observed positive momentum in both Australia and New Zealand, where it operates 74 stores. Revenue in these markets increased by 15.2 percent in the second half of the financial year. He acknowledged that growth has been slower than expected, stating, “The growth has been lower than planned, with the expected uplift from the recent interest rate cuts and improving consumer sentiment yet to materialize to the extent anticipated.”
The company’s performance in the United States has also been inconsistent. Ryan noted that ongoing changes in U.S. foreign trade policy have directly affected demand, contributing to the revenue and EBITDA figures being slightly below guidance. City Chic has previously indicated that it may reconsider its U.S. operations if trade negotiations between the Trump administration and Beijing do not lead to a resolution concerning tariffs on Chinese imports. As it stands, the U.S. market contributes around 20 percent of the company’s revenue, and approximately 90 percent of its products are manufactured in China.
City Chic shares last traded at 8.6 cents, reflecting a challenging environment for the retailer as it navigates a volatile market landscape. The company will continue to monitor both domestic and international conditions as it seeks to regain momentum and align its results with initial forecasts.
