City Chic Collective Ltd (ASX: CCX) caught investor attention on Tuesday, with its shares placed in a trading halt before the market opened. Prior to the halt, the ASX retail stock had closed trading on Monday at 30 cents apiece.
Reports have also surfaced that a billionaire investor has just raised their stake in the struggling plus-sized women's clothing retailer, although this is unrelated to the halt.
Let's take a closer look at the news.
ASX retail stock halted
City Chic shares entered a trading halt today ahead of an announcement regarding two updates. The first concerns the potential divestment of the company's Avenue arm. The second is related to a new equity raise.
The company plans to complete a fully underwritten institutional placement and a pro-rata accelerated non-renounceable entitlement offer to raise capital.
The trading halt was requested to remain in place until next Monday. However, the company will likely reveal more about the planned disposal of its Avenue arm before then, stating:
City Chic expects to make an announcement to ASX in connection with the proposed divestment of Avenue and an equity capital raising to be undertaken by way of a fully underwritten institutional placement and a fully underwritten pro-rata accelerated non-renounceable entitlement offer of new fully paid ordinary shares in City Chic.
If the company makes such an announcement before Monday, trading of its shares will likely resume.
As for the billionaire investor, according to The Australian, Brett Blundy has just increased his stake in City Chic. Blundy's BBFIT Investments recently acquired 3.3 million shares, boosting his ownership to 11.3%.
His latest purchases were confirmed in an announcement last week, bringing his stake up from 9.9% at the end of March 2023. Back then, speculation was that Blundy would drastically increase his stake after raising it to the 9.9% level.
Foolish takeaway
City Chic's focus is in the plus-sized fashion business. The company differentiates itself in this segment across the Australian, South African, European and New Zealand markets.
It has brands such as Navabi, Evans, its namesake City Chic, and the potentially soon-to-be divested Avenue under its wings.
Analysts at Bell Potter remain optimistic about City Chic, maintaining a buy rating with a price target of $0.62.
Billionaire Brett Blundy's increased stake in the company has some speculating that it could signal new confidence in the retailer's potential.
This would be welcomed since, in the last 12 months of trade, shares in the ASX retail stock are down 9% and have underperformed the benchmark by 16% in the last year.
Meanwhile, year to date, the City Chic share price has slipped 45% into the red, having collapsed from former highs of 60 cents on 13 February.
