City Chic has flagged plans to open 15 new Australian outlets within three years and expand the format of 15 existing stores in a show of confidence to investors as the crucial Christmas period looms.
The plus-size clothing retailer will tell shareholders at its annual general meeting on Thursday that it remains on track for positive comparable sales growth for FY20, highlighting plans to accelerate its online growth in the US and target larger new bricks-and-mortar outlets locally.
The chain opened nine new stores and expanded the format of three others in FY19 at a time when many retailers are reducing their footprint amid stagnant turnover and high rents.
It has already opened five stores in FY20 as its increasing US presence helps offset the burden of a “challenging retail environment” in Australia.
City Chic chief executive Phil Ryan said the new physical stores were performing to expectations even as the company’s sales increasingly came via its online portal.
“We’re consistently reviewing our store portfolio to ensure that the economics are in line with turnover and the changing rental market,” Mr Ryan said.
“We will only (open stores) when the deals are correct to ensure that the bricks-and-mortar business is economically structured for the new retail environment.”
Shares in the company were 0.73 per cent higher at $2.77 after 45 minutes of trade on Thursday and nearly tripled in value in 2019.
City Chic offloaded Specialty Fashion brands Millers, Katies, Rivers, Crossroads and Autograph to rival retailer Noni B in 2018 as it set its sights on strong growth via the plus-size market, which it estimates to be worth $50 billion globally.
Investors cheered the company’s first stand-alone profit result as City Chic Collective back in August as it swung from a $9.3 million full-year loss to a $16 million gain, and increased sales from continuing operations by 12.6 per cent to $148.4 million.
The company says US online sales remain key to its FY20 strategy.
However, while the company is on track to integrate its newly acquired US retailer Avenue as a stand-alone website, it accepts sales will drop during the first year as it revamps the bankrupt American brand.
“Obviously the bankruptcy and the closure of all (Avenue) stores across the US will have caused damage to the brand and accordingly, we expect to see a material reduction in revenue in year one,” Mr Ryan said.
City Chic will also roll out the playwear range from Hips and Curves in the second half of FY20 and continue its wholesale trail in Europe.
City Chic said much of its success in the year ahead hinged on its trading performance during the next six weeks, when shoppers hit the Christmas, Black Friday and cyber Monday sales.
“Given the large trading months in this quarter, our earnings in the first half outweigh earnings in the second half of the financial year,” Mr Ryan said