Australia's City Chic shows resilience in H1 FY26 on margin gains

Despite softer topline performance, trading gross margin rose to 62.2 per cent, up 220 basis points, while average selling price increased 6.1 per cent, reflecting the impact of the group’s product elevation strategy.

Australia and New Zealand (ANZ) remained the key growth driver, with revenue rising 7.4 per cent to $59.4 million and trading gross margin dollars up 10.1 per cent on the prior corresponding period. Comparable sales grew 4.2 per cent, supported by disciplined promotional activity during the Black Friday, Cyber Monday, and Christmas trading period, the company said in a press release.

The Americas business continued to trade profitably, though revenue declined 31.4 per cent to $9.7 million due to a deliberate reduction in inventory amid tariff-related volatility. Partner channel sales were most impacted, falling 29.9 per cent to $5.7 million, given their reliance on new product launches. Management noted encouraging resilience in US direct-to-consumer (DTC) demand and has placed Summer 2026 inventory orders to support higher sales in the second half.

Underlying EBITDA for the half is expected to be between $6 million and $7 million, representing growth of 71 per cent to 100 per cent YoY. Inventory levels declined 21 per cent to $24.7 million, driven by strategic tariff reduction initiatives.

City Chic ended December 2025 with net cash of $5.4 million, no drawn debt, and an undrawn $10 million facility, which has been extended to March 31, 2028. The group remains on track to achieve positive operating cash flow in FY26.

“Delivering growth in profitability and positive operating cash flow in the half was pleasing. We achieved this through the disciplined execution of our strategy, to elevate our brand, focus on high value customers and deliver margin expansion,” said Phil Ryan, chief executive officer and managing director of City Chic.

Fibre2Fashion News Desk (SG)