The City Chic Collective Ltd (ASX: CCX) share price has jumped 10% after reporting its FY21 result with huge growth.
FY21 result
City Chic reported that its sales revenue in FY21 increased by 32.9% to $258.5 million.
Its global customer base grew by 61% year on year to 1.07 million, whilst the global customer website traffic increased 68% year on year to 58.1 million visits.
Sales outside of Australia and New Zealand totaled 44.1% of group revenue. Total online sales soared 49.3%, with online sales making up 73% of total sales. ANZ revenue grew 27%, leading to market share growth. The US saw 37% constancy currency growth. Avenue.com is trading consistently above pre-acquisition levels and the City Chic US website has returned to pre-pandemic growth levels.
The Evans acquisition is now complete and inventory levels are back to a commercial level, with sales already on a run rate of pre-acquisition levels.
Management said the its UK and European marketplace partners strategy has moved forward in the second half, with brands launching on Next.co.uk and Curvissa. It has also agreed to extend its wholesale partnership with the Alshaya Group into a franchise arrangement in over 20 Debenhams stores across the Middle East and the associated.
City Chic’s gross profit margin improved from 57.8% to 61.8%.
The sales growth and gross profit margin improvement helped City Chic grow its underlying EBTIDA (EBITDA explained) by $59.8% to $42.4 million.
Underlying net profit jumped 80.6% to $24.9 million, whilst statutory net profit surged 135.3% to $21.6 million.
Outlook for City Chic and the share price
City Chic has ‘soft launched’ its conservative value product into the Australian market. Management say this will allow it to address the “broader curvy community”.
The ASX retail share said that it’s well capitalised with net cash of $71.5 million (and no debt) for delivering on its strong organic growth pipeline as well as future acquisition opportunities.
City Chic didn’t pay a dividend this time, but will review paying a dividend with its FY22 interim result.
In the first eight weeks of FY22, it has seen Avenue continue to trade strongly, Evans rebound strongly, ANZ sales were flat (despite lockdowns) and Navabi trading ahead of expectations.
A number of marketplace partnerships are expected to be live by September 2021 including Walmart (US) and eBay (AU). Marketplace integrations are also underway for Zalandon (Germany), Amazon (UK) and Target (US) which are all expected to be live in the first half of FY22.
I think City Chic is a very exciting ASX retail share along with ones like Wesfarmers Ltd (ASX: WES), Lovisa Holdings Ltd (ASX: LOV), Temple & Webster Group Ltd (ASX: TPW) and Redbubble Ltd (ASX: RBL). City Chic could be one of the best retailers with global growth plans. But the City Chic share price is now priced very highly for that growth. It’s hard to say what a good price is for the business.
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