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Plus-size fashion retailer City Chic Collective (ASX: CCX) is on track to increase underlying earnings up to 95 per cent for FY26 as a strong performance in its home market has offset a deliberate retreat from the United States amid tariff uncertainty.
The company says it expects to deliver underlying EBITDA of between $11.5 million and $12.5 million for FY26, representing growth of 80 to 95 per cent on the prior year.
The preliminary trading update for the 52 weeks to 28 June this year is expected despite a 3.1 per cent fall in group revenue to $130.5 million, dragged down by a 42.2 per cent decline in US revenue.
Stripping out the closed Wholesale and Amazon channels, the US drop was 28.1 per cent.
City Chic attributes the US pullback to a "deliberate decision to temporarily reduce inventory purchases in response to tariff-related volatility", a move that has weighed on top-line revenue but has protected margins and cash.
The Australian and New Zealand (ANZ) business more than compensated, with sales rising 7.6 per cent to $113.8 million and the trading margin lifting 2.1 percentage points to 60.6 per cent.
Total customers across the group grew 3 per cent to 517,000, while cost of doing business fell 7.5 per cent.
Inventory was down 11.4 per cent to $24.1 million at year end, and the company held a net cash position of $5.2 million with an undrawn $10 million facility available.
“The disciplined execution of our strategy has delivered a materially stronger earnings result this year, reflecting ongoing margin improvement and strong cost management across the business," says City Chic CEO Phil Ryan.
“Our ANZ business delivered strong sales growth of 7.6 per cent, underpinned by growth in both store and online channels.
"While we had anticipated second half tailwinds from rate cuts, instead we saw further rate increases and higher fuel prices which resulted in record low consumer confidence in Australia.
"Against this challenging backdrop, the team has remained focused on executing our strategy and meeting our customer where she is. This has become our motto as we continue to navigate this environment with her."
Ryan says City Chic's customer base continues to grow, while the feedback and satisfaction scores received by the company are "very encouraging".
"The improvements we’ve made in product and the service delivered by our store teams are clearly resonating with her, reinforcing what makes City Chic special," he says.
“We continue to build a more resilient and profitable business, characterised by a stronger margin profile, a lower cost base and disciplined inventory management.
"Maintaining our strategic focus on product and customer experience, we are confident in our ability to continue to grow sales and deliver sustainable profitability over time.”
The full-year result tracks the trajectory set at the half-year mark, when City Chic reported first-half EBITDA of $6.5 million, up 86 per cent, with Americas revenue already down 31.4 per cent.
Shares in City Chic were trading almost 28 per cent higher at 6.9c at 12.14pm (AEST) following this morning's announcement.
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