The City Chic Collective Ltd (ASX: CCX) share price is on watch this morning after the womenswear retailer released its full year results. City Chic reported strong growth in sales revenue despite store closures. Trading profitably through the coronavirus pandemic, City Chic grew its customer base by 72% in FY20 with online penetration reaching 65% of total sales.
What does City Chic Collective do?
City Chic is an omni-channel retail specialising in plus size women’s fashion, footwear, and accessories. The company has a network of 93 stores across Australia and New Zealand. It also sells via websites operating in ANZ and the US and via wholesale partnerships. City Chic acquired US business the Avenue late last year, which has driven growth in US and online sales. It is now looking to acquire the eCommerce assets of Catherines, a well-recognised US-based plus size retailer.
How did City Chic perform in FY20?
City Chic reported sales revenue of $194.5 million in FY20, an increase of 31% over the previous year. Following the acquisition of Avenue, online channels now represent two thirds of global business. US online websites contributed sales of $65.2 million in FY20 compared to $10.7 million in FY19, largely driven by the expanded customer base from the Avenue acquisition. Australian and New Zealand sales fell by 4.8%. Sales growth of 9.9% in the first half was offset by a 21.5% fall in the second half due to coronavirus and store closures. Trade has improved with the reopening of stores, with sales down 26% in June versus 47% in April.
City Chic grew its global customer base 72% to 663k active customers in FY20. This contributed to global online website growth of 113.5%. But gross profit margin decreased to 48.1% from 57.8% in FY19 due to the shift in channel mix to online and higher levels of discounting. Underlying EBITDA increased 6.6% to $26.5 million but underlying EBITDA margin fell to 13.6% from 16.8% in FY19, impacted by a lower contribution from stores in the second half. This flowed through to statutory NPAT, which fell to $9.2 million from $14.3 million in FY19. In light of strategic priorities and uncertainty caused by COVID-19, City Chic has elected not to declare a final dividend.
What’s next for City Chic?
City Chic’s net cash position was $112.3 million at 24 August, reflecting the proceeds of its $110 million July capital raisIng. Funds will be used to pay for the acquisition of Catherines and provide flexibility to accelerate growth globally. The company says current market conditions are favourable to explore opportunities to expand the global customer base. City Chic believes it is well positioned to leverage its lean, customer-centric model to drive scale and grow its global footprint.
The City Chic share price was tading a $3.30 at close of trade yesterday.
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