City Chic Collective Ltd (ASX: CCX) shares had a bumper day on Wednesday, surging to a new all-time high of $5.14 in intraday trading. By market close, the City Chic share price had edged slightly lower, finishing the day up by 4.29% to $5.12.
Let’s take a closer at some of the events that have helped boost the apparel, footwear and accessories retailer for plus-size women this year.
First we take Manhattan
The City Chic share price may be benefitting from a number of positive announcements over the last few months. Recent acquisitions of the Evans and Avenue brands have allowed the company to expand its footprint in the United States, the United Kingdom and Europe.
Specifically on the US opportunity, City Chic notes there is significant market share to be gained in the US$49 billion market. The company is attempting to build on its growth trajectory, with the cross-selling of City Chic products to Avenue customers and marketing campaigns to grow its customer base and re-engage existing customers.
In its presentation to investors on 5 May, City Chic announced it wants to lead ‘the world of curves’ — a women’s plus-size market forecast to grow by 7% annually. The company pointed to a number of factors underpinning its growth plans. Firstly, the average annual spend in the plus-size category is currently materially less than the rest of the women’s apparel market. Secondly, according to City Chic, there is an increasing population of plus-size women globally.
Also in the company’s presentation, City Chic said comparable store sales growth and customer numbers in the June half-year to date are accelerating. Structural tailwinds are also helping, as sales on the City Chic website in the US have returned to pre-pandemic growth rates. There is also City Chic’s clear focus on online sales, where the company represents 25% of total plus-size sales globally. City Chic believes it can grow that number significantly.
More acquisitions to come
As also reported by the Australian Financial Review last month, City Chic chief executive Phil Ryan, and chief financial officer Munraj Dhaliwal, told the Macquarie Australia Conference the group was cashed up, after raising $110 million last July.
Management also highlighted that acquisitions in new markets facilitate speed to market and enable the company to acquire new customers faster. Although, the company did point out its growth plans are not only acquisition-led.
City Chic’s market entry into Europe is a key piece of the growth puzzle. The company points to a significant opportunity in the US$45 billion market and is well-progressed with its launch expected in the first half of FY22.
The numbers tell the story
Another catalyst that may be boosting the City Chic share price in 2021 could be the solid numbers that came out of the company’s half-yearly report released in February. City Chic showed sales growing 13.5% to $119 million. Furthermore, underlying earnings before interest, tax, depreciation and amortisation (EBITDA) grew 21.8% to $23.3 million with the EBITDA margin increasing from 18.2% to 19.6%.
City Chic’s online trade has also accelerated in the last 12 months. In the first six months of FY21, 42% of the company’s sales were transacted online.
City Chic share price snapshot
Following today’s gains, the City Chic share price is trading around 25% higher in 2021. The company’s shares have surged by around 20% in the past month alone. Over the last year, City Chic shares have jumped by around 88%.
Based on the current share price, City Chic has a market capitalisation of $1.2 billion.