Why the City Chic Collective share price is up 350% in 2018

The City Chic Collective Ltd (ASX: CCX) share price has gone gangbusters over the last year to climb from 19 cents last January to as high as $1.40 in October 2018 before dropping back to 90 cents today. Still from 19 cents to 90 cents in a year is a 350% gain so let’s consider what’s powering this rocketing share price.

The first point to note is that City Chic Collective is the former Alexandria-based Specialty Fashion Group that recently sold the Millers, Katies, Autograph and Rivers brands to Noni B which is another Alexandria-based rag trade operator.

However, it kept it most profitable and successful City Chic business that as a standalone operation delivered 12.9% same store sales growth in FY 2018 to deliver EBITDA of $19.9 million on revenue of $132 million. It’s the restructure and very strong same-store sales growth, growing online sales, and margins that are all helping the share price soar.

The retailer also has a net cash position of $25 million and is likely to impress some small-cap enthusiasts.

Motley Fool contributor Tom Richardson has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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