City Chic has announced a notable earnings turnaround for the financial year ending June 29, 2025, but the retailer has not met its full-year earnings and sales guidance. The womenswear brand, backed by investor Brett Blundy, attributed the shortfall to ongoing tariff threats from Donald Trump that have dampened consumer demand. CEO Phil Ryan highlighted that the anticipated boost in consumer spending, following the Reserve Bank of Australia‘s recent interest rate cuts, has not yet materialized.
The retailer projects global sales will reach $134.7 million for the upcoming financial year. Although this figure reflects a 2.3 percent increase from the previous year, it falls short of City Chic’s revised guidance, which estimated sales would be between $137 million and $147 million. Earnings before interest, taxes, depreciation, and amortization (EBITDA) are expected to range from $6 million to $6.5 million, a significant recovery from a loss of $8.4 million in the 2024 financial year, yet still below the revised forecast of $8 million to $12 million.
Challenges in Key Markets
Mr. Ryan described the company’s return to profitability as an important milestone. He noted positive momentum in both Australia and New Zealand, where City Chic operates 74 stores, with revenue increasing by 15.2 percent in the second half of the year. Nevertheless, he acknowledged that growth has not met expectations, stating, “The growth has been lower than planned, with the expected uplift from the recent interest rate cuts and improving consumer sentiment yet to materialize to the extent anticipated.”
The situation in the United States remains uncertain, with the fluctuation in foreign trade policy directly affecting demand. Mr. Ryan emphasized, “Both factors have resulted in our revenue and EBITDA being slightly below our guidance.” City Chic generates approximately 20 percent of its revenue from the US market, where 90 percent of its products are manufactured in China.
In May, the company indicated it might consider pulling out of the US market if trade negotiations between the Trump administration and Beijing do not yield positive results. This decision underscores the significant impact of international trade relations on City Chic’s operations.
Market Performance and Future Outlook
As of the latest trading session, City Chic shares were valued at 8.6 cents. The retailer’s performance in the face of external pressures highlights the broader challenges facing many businesses that rely heavily on international supply chains and consumer sentiment. With ongoing tariff threats and fluctuating economic conditions, City Chic will need to navigate these challenges carefully to achieve its future growth ambitions.
As the company prepares for the next financial year, it remains to be seen how effectively it can adapt to these market dynamics and drive sustainable growth in both domestic and international markets.
