AFR:Bell Potter has strengthened its growth forecasts for City...

AFR:

Bell Potter has strengthened its growth forecasts for City Chic after the company reported it had continued to trade profitably through COVID-19 restrictions.The broker held its buy recommendation on the stock but increased its price target from $2.10 to $3.40.City Chic is re-opening stores. SuppliedBell Potter noted the company had been able to remain profitable through the restrictions due to a strong online contribution, flexible supply chain, low fixed costs structure and successful rent reductions. "Despite online already being a large part of ANZ, online sales lifted 57 per cent during store closures," said analyst Sam Haddad."This reflects quick adjustment in product mix to cater to strong demand in intimates, casual and streetwear; store customers shopping online for the first time; although also boosted from more promotions in order to manage cashflows and inventory, which means lower gross margins."It also noted Avenue, its newly acquired US business, had traded resiliently and continued to exceed the company's own expectations. "We attribute this to strong integration progress including early benefits of improvement in customer engagement & migration of store customers to online; and Avenue being a value brand with a strong offering in casual wear which we believe has resonated strongly in the current difficult environment," said Mr Haddad.