A good long term story, page-5

Usually, when companies have a high level of return on investment (like City Chic), they try to grow as fast as possible.
And it is probably City Chic's strategy, for their online business.
However, their growth is constrained in the short term by the impacts of covid (ex. they lost 37 % of trading days across their store portfolio YTD, at 17/11/21).

Anyway, their growth profile is interesting :
- in Australia/NZ (their historical basis), they continue to have a strong growth : + 27 % in FY 21 (+ 32 % on a comparable basis), driven by the growth of their online business (+ 45 %),
- in Americas, their sales are now an a strong trend : + 27 % in FY 21 (+ 31 % on a comparable basis), driven by + 44 % for online website (led by Avenue.com),
- EMEA (mainly Europe) is still at the initial stage.

The company is a bit concerned in the short term, by their trend in Europe. But it does not matter much for now, as EMEA is a small part of their business (6 % of FY 21 sales). While they are in a similar situation, where they were in the US, before the Avenue acquisition.

In the short term, the main interesting region is probably Americas (US and Canada) as they have now digested the acquisition of Avenue and seems to be, at the point, where they are clearly accelerating. City Chic had only 100 m sales in Americas in FY 21, while this market is estimated at 49 bn USD.
There was a high level of confidence regarding Avenue at the AGM last week :
- "Avenue continues to deliver strong growth on last year and above pre-acquisition level",
- " Avenue has proved to be a very good acquisition. Not only given us a higher profile in our biggest market, but also it has allowed us to introduce our other brands to US customers. This has been extremely well received.
- "Avenue is now selling more City Chic or fashion products than any other channel in the US.
Avenue traffic is huge : the addition of our fashion stream has increased conversion, traffic and basket size".

Overall, I would not be surprised that City Chic annual sales growth accelerates to 40 %+, once they are passed the negative impact of covid, looking at their underlying trends at the moment, both in ANZ and Americas.