Highlights

  • City Chic Collective (ASX:CCX) reported FY26 underlying EBITDA growth of 92% as profitability improved across the business.
  • Revenue was $130.5 million, while trading Margin expanded to 60.6% through improved product mix and lower discounting.
  • The company strengthened its Balance Sheet with lower inventory levels and improved cash position.
  • Early FY27 trading showed positive momentum, with sales growth and continued focus on margin discipline.

City Chic Collective (ASX:CCX) has continued its recovery journey, delivering a significant improvement in profitability during FY26 as the company focused on disciplined inventory management, stronger margins and a more efficient operating model.

The plus-size fashion retailer has spent recent years restructuring its Business following challenges from international expansion and changing consumer conditions. The latest results indicate progress in rebuilding Earnings quality, although the company remains focused on proving that the recovery can be sustained over the longer term.

FY26 Performance

City Chic reported FY26 Revenue of $130.5 million, compared with $135.0 million in the previous year.

While sales were slightly lower, profitability improved significantly, with underlying EBITDA increasing 92% to $12.3 million.

The improvement was supported by stronger gross margins, lower operating costs and improved inventory management.

Trading margin increased to 60.6%, reflecting better product selection, reduced discounting and improved promotional discipline.

The company also reduced underlying operating costs by $7.1 million as part of its ongoing efficiency program.

Inventory levels declined to $24.1 million, down 11% year-on-year, supporting improved Working Capital Management and reducing exposure to future markdown requirements.

Active customers reached a record 517,000, indicating continued engagement across the company’s customer base.

Turnaround Strategy

City Chic’s recovery strategy has focused on improving profitability rather than pursuing aggressive revenue expansion.

The company has prioritised disciplined buying, tighter inventory control and a more targeted approach to international operations.

This approach represents a shift from earlier expansion strategies that increased costs and financial pressure, particularly across overseas markets.

Management has focused on building a leaner operating structure while maintaining Investment in areas that can support future growth.

The improved earnings profile demonstrates the impact of reducing costs and improving operational efficiency.

Regional Performance

Australia and New Zealand remained a key contributor to City Chic’s recovery.

Revenue in the ANZ market increased, supported by stronger full-price sales, improved product availability and a more disciplined promotional strategy.

The US business has been managed with a greater focus on profitability and risk control rather than sales growth alone.

Management reduced purchasing commitments amid tariff-related uncertainty, prioritising margin protection and inventory discipline.

The company’s approach has helped reduce operational risk while creating a more sustainable foundation for future expansion.

Growth Drivers

City Chic’s future growth strategy is supported by three main areas: customer retention, margin improvement and digital capability.

The company continues leveraging its large customer base while improving personalisation, product selection and customer experience.

Technology investment remains a focus area, including the use of artificial intelligence tools to support buying decisions, sizing recommendations and customer engagement.

Digital channels continue to play an important role, allowing City Chic to reach customers across multiple markets while maintaining a flexible operating model.

The company’s ability to maintain higher margins while gradually rebuilding sales growth will be central to its future performance.

FY27 Momentum

City Chic entered FY27 with improving operational momentum.

Management reported positive early trading conditions, including growth in store comparable sales and stable margins.

The company is focused on maintaining profitability while selectively rebuilding growth opportunities, particularly in international markets.

The US segment remains an important area of potential upside if consumer Demand improves and inventory investment increases.

However, management continues to prioritise disciplined expansion rather than rapid growth.

Key Focus Areas

Investors will continue monitoring whether City Chic can sustain its improved trading margins without returning to heavier discounting.

The performance of the ANZ business, particularly sales growth and customer engagement, will remain an important indicator.

The company’s ability to rebuild US revenue while protecting profitability will also be closely watched.

Cash generation, inventory levels and balance sheet strength will remain key measures as City Chic continues its recovery.

Risks

City Chic operates in the competitive apparel retail sector, where consumer spending trends, pricing pressure and changing shopping behaviour can affect performance.

The company remains exposed to discretionary spending conditions, particularly during periods of weaker household confidence.

International operations, especially the US market, introduce additional risks related to tariffs, currency movements and demand volatility.

Although the business has improved its financial position, its history of losses means maintaining operational discipline remains critical.

Competition from larger retailers and online fashion platforms may also place pressure on growth and margins.

Future Outlook

City Chic enters FY27 with improved profitability, stronger margins and a more disciplined operating model.

The FY26 result provides evidence that the company’s restructuring efforts are delivering measurable improvements, particularly across cost management, inventory control and earnings performance.

The next stage of the turnaround will depend on whether City Chic can combine margin strength with renewed sales growth.

Sustaining ANZ momentum, rebuilding selected international opportunities and continuing disciplined execution will determine whether the company can convert its recovery into a longer-term growth story.