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City Chic raises at 50pc discount

Carrie LaFrenz

Troubled specialty retailer City Chic is raising $23 million at just 15¢ per share – a staggering 50 per cent discount to its last traded price.

The raising consists of a fully underwritten institutional placement of $5.4 million and a one-for-2.04 accelerated non-renounceable entitlement offer to raise $17.6 million.

New shares are being issued at a price of just 15¢, a 50 per cent discount to the last close of 30¢ on June 17. The stock has been in a back-to-back trading halt this week.

The retailer confirmed The Australian Financial Review’s story this week that full-year sales will be down 30 per cent to $187 million with trading conditions remaining uncertain.

City Chic also has offloaded its US-based Avenue brand to Full Beauty Brands for cash sum of $US12 million ($18 million), but will pocket $14.5 million after working capital adjustments. The sale allows City Chic to focus on the core customers in Australia and the US.

Upon completion, City Chic will sell its City Chic brand products on the Avenue website.

“We have aligned our cost base to the current economic environment and with our revised debt arrangements, equity raising and return to more normalised inventory patterns, I am confident we have the right platform in place to return to profitable and sustainable trading,” said CEO Phil Ryan.

Mr Ryan said City Chic’s new season product and marketing initiatives have helped margin expand overall fourth-quarter gross margins up 15 per cent on the prior period.

City Chic is focused on dressing plus-size women and operates a network of 77 stores across Australia and New Zealand and websites.