The fashion retailer has had a wow of a year thanks to online sales and international expansion.
The post The City Chic (ASX:CCX) share price is up over 30% in 2021 appeared first on The Motley Fool Australia. –
The share price of ASX women’s clothing retailer City Chic Collective Ltd (ASX: CCX) has rocketed higher this year – shrugging off the impacts of ongoing lockdowns in Australia’s most populous cities.
City Chic shares have surged more than 30% higher this year – to $5.26 at the time of writing. And just last month they set a new 52-week high of $5.97.
What has driven the City Chic share price higher?
The short answer is the strength of the company’s online sales channels.
Just before the pandemic, in October 2019, City Chic acquired the eCommerce assets of Avenue, a plus-size women’s clothing retailer based in the US.
This move had the twin benefits of both increasing City Chic’s presence in the US market and also expanding its online sales channels just as cities across America were being plunged into lockdowns.
The success of this acquisition was evident in City Chic’s interim FY21 results. Despite the impacts of lockdowns in Australia and New Zealand, the company still managed to grow its revenues by 13.5% (versus the first-half FY20) to $119 million.
This was due in large part to the increased proportion of the company’s sales that had come in from overseas. The northern hemisphere made up 45% of global sales during the first half of FY21 (up from just 29% the year before).
But City Chic’s sales mix hadn’t just shifted geographically. Online sales grew by 42% to make up 73% of total sales for the half (versus 53% of first-half FY20 sales).
The relative success of its lower cost online sales channels meant that City Chic was able to expand its margins and grow its bottom line at a faster rate than top-line revenues. Net profit after tax jumped almost 25% higher to $13.1 million.
More recent news
Last month, City Chic announced that it had acquired European plus-size women’s eCommerce retailer Navabi for €6 million.
In 2020, Navabi websites generated €10.4 million in sales (around $16.6 million) from approximately 5.8 million customer visits. However, the business actually performed better prior to the pandemic when site traffic would regularly exceed 10 million customer visits per year.
City Chic sees the acquisition as an opportunity to further expand into the European plus-size clothing market – a market it values at approximately €40 billion.
At the same time as it announced the acquisition, City Chic also provided an FY21 trading update. The company stated that full-year FY21 unaudited revenues were $258 million, a year-on-year increase of almost 33%.
Earnings before interest, tax, depreciation and amortisation expenses (EBITDA) were expected to land between $42 million and $42.5 million, representing annual growth of up to 60%.
It also stated that FY22 performance had also so far exceeded expectations, with “strong US and UK performance outweighing the impact of temporary store closures due to lockdowns in Australia”.
Recent movements in the City Chic share price
The City Chic share price has pulled back a little more recently, sliding 12% from its 52-week high of $5.97.
Shareholders will be hoping for some more upside surprises from the company’s full audited financial results when they are released to the market on 26 August.
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Motley Fool contributor Rhys Brock has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.