City Chic Collective (CCX) Investor Presentation summary

Business transformation and strategic focus

• Divestment of Avenue for US$12m (A$18m) enables a single brand focus on the core City Chic customer in ANZ and the US, simplifying operations and unlocking cost savings.

• Business restructure and right-sizing initiatives are expected to deliver total cost savings of $20.3m, with $8.8m achieved in FY24 and a further $11.5m targeted for FY25.

• Change in US fulfilment provider and supply chain simplification are set to improve margins and operational agility.

• Strategic brand refresh and targeted marketing aim to increase average sale price (ASP), retention, and profitability, focusing on higher-value customers.

• Avenue divestment includes an ongoing commercial relationship with FullBeauty Brands, allowing continued City Chic product sales via Avenue.com.

Financial overview and trading update

• FY24 forecast group sales (including Avenue) are down 30% year-on-year to $187m, with challenging trading conditions and lower customer frequency due to cost-of-living pressures.

• Pro forma adjusted EBITDA (post-AASB16) from continuing operations is forecast at a $9.3m loss, excluding Avenue and one-off items.

• Gross margin for the continuing business is forecast at 56.3% after removing Avenue, with margin improvements in H2 driven by new product mix and higher ASP.

• Inventory levels have normalised post-COVID, with a return to typical purchasing cycles and a focus on higher-value, newer products.

• Active customers in the continuing business are up 32% from 2019, though overall trading volumes are lower.

Balance sheet, capital structure, and equity raising

• Equity raising of $23.0m via an institutional placement and accelerated non-renounceable entitlement offer, underwritten up to $17.5m, at $0.15 per share (a 50% discount to last close).

• Proceeds will be used for debt repayment, working capital, costs of changing US fulfilment provider, and transaction/restructuring costs.

• Debt facility reduced from $20m to $10m and extended to December 2026, with a requirement for periodic clean-downs.

• Pro forma balance sheet post-transaction shows strengthened liquidity and reduced leverage, with net assets of $45.1m.

• Immediate use of funds will pay down debt, with the ability to redraw up to $10m for working capital.