City Chic Collective H1 FY24 Results Overview

City Chic Collective (ASX: $CCX) has reported its H1 FY24 results, with a revenue of $106m, representing a 29% decrease from the previous corresponding period (PCP). The company experienced margin recovery into Q2 and positive momentum into H2. Despite economic conditions impacting transaction volumes, strategic initiatives have delivered results, including approximately $25m in annualized cost savings and mitigation actions phased in over the next 7 months. The underlying EBITDA stood at ($7.5m), down from $3.6m in PCP. However, the inventory level has normalized, with a positive cash position of $3.5m at the end of December 2023.

Executive Commentary on H1 FY24 Results

The strategic cost actions taken to right-size the cost base have delivered approximately $3m in cost reductions in H1, with the potential for an additional $6.3m of savings if implemented as of 1 July 2023. We have also seen improvements in customer engagement, with a Net Promoter Score (NPS) of 71 and strong sell-through of new store ranges. Our focus on driving margin and demand, revitalizing product assortments, and simplifying the business has shown promising results, with margin up 10 percentage points in Q2 compared to Q1. We are committed to delivering a quality garment at a great price while targeting a 60% gross margin and 3 inventory turns. Our cost initiatives have exceeded targets, with approximately $25m in annualized cost savings and mitigation. We are optimistic about the future benefits, including the mitigation of contracted increases in key fulfillment contracts.

Summary of H1 FY24 Results and Outlook

City Chic Collective's H1 FY24 results reflect the impact of economic conditions on transaction volumes, leading to a 29% decrease in revenue compared to the PCP. However, the company's strategic initiatives have shown promise, with margin recovery, positive trading metrics, and significant improvements in customer engagement. The focus on right-sizing the cost base and driving margin and demand has resulted in approximately $25m in annualized cost savings and mitigation. The company aims to achieve a 60% gross margin and 3 inventory turns while simplifying the business and driving down costs. Looking ahead, City Chic Collective anticipates trading profitably in H2, supported by strategic marketing programs, new season product margin improvement, and realized cost reductions. The company remains committed to ethical trade practices, social responsibility, and environmental sustainability, aiming to make a positive impact on people and the planet. Despite the uncertain trading conditions, City Chic Collective is optimistic about the future and the potential for continued progress in delivering value to its customers and stakeholders.