City Chic shares surge after holiday sales boom in Australia, New Zealand

Shares in City Chic have surged after the Brett Blundy-backed womenswear retailer reported positive sales at its Australia and New Zealand stores during the all-important holiday trading period.

The stock closed up 14.6 per cent to 11¢ on Tuesday after the retailer revealed group revenue lifted 3.2 per cent in the six-week holiday period, encompassing Black Friday, Christmas and Boxing Day.

The result was driven by its 72 stores in Australia and NZ, which posted a 9 per cent increase in sales on the prior corresponding period.

Still, City Chic expects group revenue to fall 3.6 per cent to $69.5 million in the first half of the financial year, dragged down by the 22 per cent sales decline in the Americas region, where it has wholesale partners and online stores.

Underlying earnings before interest, tax, depreciation and amortisation is forecast to hit between $3m and $4m in the 26 weeks to December 29, which the company said was a “strong turnaround” from the $4.4m loss a year ago.

The update comes a day after rival retailers Myer and Premier Investments both highlighted challenging retail conditions in December, despite strong Black Friday and Cyber Monday sales.

City Chic — where Mr Blundy has a 7 per cent interest via his BBFIT Investments — said the Australia and NZ business continued its turnaround from the second-half of the 2024 financial year.

City Chic chief executive Phil Ryan on Tuesday said the recovery in the Antipodean market was particularly pleasing as it was among its priorities leading into the 2025 financial year.

“Our store and online business built strong momentum leading into the holiday period and delivered robust results from Black Friday through to the Christmas and Boxing Day trade,” he said.

“We expect this momentum to continue into (the second half). Additionally, our new summer product has been well-received and the increase in sell price has contributed to materially stronger margins.”

At the company’s annual general meeting in November, Mr Ryan said it had completed its business transformation — including a brand refresh, reduced inventory and evolved its product to more versatile lifestyles.

City Chic’s trading update came the same day Westpac revealed consumer sentiment had soured for two months in a row and remained on the pessimistic side in January.

“As well as the ongoing unsettled global backdrop, it is possible that consumers were reacting to news about the depreciation of the Australian dollar against the US dollar,” Westpac chief economist Luci Ellis said

This resulted in some negative headlines about the outlook for interest rates and the broader economy, she said.

The latest Westpac-Melbourne Institute consumer sentiment index also showed household’s assessment of their finances compared with a year ago reversed the gains in December.