Retailer City Chic to post H1 loss as inventory mess deepens

Mr Blundy is one of the biggest names in Australia’s retail sector, backing the likes of Bras N Things, Lovisa and Honey Burdette, to help build a multibillion-dollar fortune.

City Chic said on Friday inventory was expected to be between $163 million and $164 million at the end of the half – below the range it guided at its annual meeting. But it confirmed that it remained on track to trim the inventory balance to $125 million to $135 million at the end of the financial year.

Chief executive Phil Ryan said the company was on track to deliver its strategic logistics initiatives, and continue to focus on cost management.

“With the support of our lender, we have amended our debt facility in line with our changing business needs. We remain extremely confident in executing on our strategies and returning to profitable growth as these cyclical headwinds unwind,” he said.

Citi analyst Sam Teeger said in a note earlier this week the arrival of Mr. Blundy on City Chic’s register is positive.

“While City Chic’s interim result next month is unlikely to be good, in our view, Mr Blundy’s new shareholding in City Chic suggests there may be upside to business performance over the medium to longer term,” he said.

He said since City Chic does not have brick-and-mortar stores in the US, it could be at a competitive disadvantage compared to US and UK competitors who have a physical store presence. This would also decrease City Chic’s addressable market in the US from $US49 billion to $US38 billion, he added.

City Chic is a global online and bricks-and-mortar retailer with a network of 90 stores across Australia and New Zealand and websites operating in ANZ, the US, the UK and Europe. The retailer will announce its audited financial results on February 27.