Women’s specialty fashion retailer City Chic Collective is in a big mess and it is likely to get worse in coming months, leaving it vulnerable to private equity.
Royal and Navabi, catering to the plus-size women’s apparel and footwear market.The stock is down over 90 per cent in the year date to just 46¢ – although on Wednesday it clawed back some significant losses from the previous day when it crashed after another poor update.
Put simply: City Chic appears to have more than three times the stock it should, and now must heavily discount to move it. It will not have new stock – so no new freshness to keep consumers coming back.private equity could pay up to $142.6 millionIts offshore operations could easily be divested or closed down and a liquidation of allocated inventory could fund part or all of this closure, they said.
Wilsons analysts believe City Chic will achieve those inventory targets in June. It will be costly, though, given 80 per cent off Winter Essentials are available on Avenue.com after 80 per cent discounts store wide during the Black Friday-Cyber sale period – highlighting the degree of discounting required to reach these targets.
In fashion, inventory is perishable. Hefty constant discounting hurts the brand. And what’s worse is many of City Chic’s US peers have similar overstock issues, so the segment is drowning in stock … but it appears City Chic is the worst of the bunch.
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