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Highlights
- City Chic (CCX) shares dip due to lowered US sales expectations.
- Company adjusts strategies with focus on mitigating tariff impact.
- Volatility continues to challenge growth targets for FY25.
City Chic Collective (ASX:CCX), a leading global retailer of plus-size fashion, has faced a significant drop in its share price after the company revised its sales expectations for the US market, citing uncertainty surrounding tariffs and associated market volatility. The stock fell by 2.38%, reaching just 8 cents at 10:55 AM AEST, marking a troubling trend for investors. Over the past year, City Chic has seen a staggering 74% decline in its share price.
The company revealed that it had preemptively imported a substantial portion of its 2025 summer and 2026 winter collections to the US in an effort to minimize the impact of anticipated tariff hikes. With 90% of City Chic’s products sourced from China and approximately 20% of its revenue generated in the US, these tariff changes are expected to significantly affect profitability. The company faces a daunting 145% average duty rate, with a portion of its US products subject to a 27.5% tariff.
As a result of this tariff uncertainty, City Chic (ASX:CCX) has halted further stock shipments to the US market and cut back on marketing expenditures. In light of these developments, the company has revised its FY25 revenue forecast to between $137 million and $147 million, down from previous projections. The EBITDA target has also been lowered to between $8 million and $12 million. These reductions highlight the challenges ahead, as the company braces for potential disruptions in its operations due to ongoing volatility.
Despite these setbacks, City Chic reported a modest 8% growth in total trading for the first 18 weeks of the second half of FY25, compared to the same period last year. While growth in the Australian and New Zealand markets has been strong, up by 17%, the US market saw a 13% decline. Moreover, group online traffic surged by 23%, indicating that e-commerce remains a stronghold for the company.
The uncertainty surrounding US tariffs has led City Chic to explore strategies to manage future risks. The company is in discussions with its suppliers to mitigate the financial impact and has an option to exit the US market with minimal costs if the tariff situation remains unfavorable.
As City Chic navigates these turbulent waters, investors may want to keep an eye on how the company adapts to shifting market conditions, especially in the context of broader market trends, including the performance of ASX200 and the impact on ASX dividend stocks.
