Why did City Chic (CCX) shares crash yesterday?
CCX -19.31%: retailers have largely surprised to the upside this reporting season, however, shares in City Chic were sold off heavily after today’s weak FY22 result and outlook. Sales grew 39%, but fell short of consensus, while profit rose just 3% as margins were squeezed, the $22m posted was an 18% miss to expectations. Inventory ballooned in the second half to $195m, up more than 50% from the first half, fanning fears of an inventory write-down or higher carry costs. FY23 trade is in line with the same period last year though management flagged consumer spending uncertainty. Inventory is expected to normalize to $125-135m and they expect to be net cash positive in the second half of the year.
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