Australian fashion retailer City Chic Collective (ASX: CCX) is set to significantly expand their exposure to the lucrative U.S fashion market following the acquisition of US-based plus-size retailer Avenue Stores LLC for $24.4m.
With Avenue Stores going under the hammer via commercial auction, City Chic was successful with a bid of US$16.5m (approximately A$24.4m) for the US-based company, who are also a retailer of plus-sized women’s apparel.
The sale came at a tumultuous time for the American retailer, which are reportedly closing their physical locations in the U.S. Key to the acquisition, City Chic is anticipated to acquire the company’s customer database and inventory which is expected to significantly increase their presence in the United States, where they also have two online retail websites in operation, as well as wholesale partnerships with major retailers Macys and Nordstrom.
The successful bid comes one week after City Chic’s announcement that they were the nominated ‘stalking horse’ bidder at US$10.m, with the new transaction subject to approval by the U.S Bankruptcy Court.
City Chic has become a leading retailer in Australia and New Zealand for plus-sized women’s fashion, stocking sizing from AU14-24. Since launch publicly in 1998, City Chic has continued to grow its presence to now have 104 stores operating in Australia and New Zealand. In the 2018 financial year, the company reported its consolidated revenue from continuing operations at over A$148m.
In 2018, the global inclusive clothing industry was estimated to be worth approximately $278.2b and anticipated to grow further by 2022 (Coresight Research). In Australia, the average waist circumference for a woman was estimated to be 87.7cm (2011-12), increasing by 1.9cm since 2007-08 (ABS). Using Australian sizing, this equates to an estimated clothing size of 14-16 (Finder). The above data suggest that City Chic are well situated as a leader in the seemingly increasing market place.
Following the announcement on Friday afternoon, the market responded positively to the news of the acquisition, attaining an intraday-high of $2.84, the highest the stock has been in seventeen years.