The ( ) share price is sinking like a very heavy stone on Monday. In late trade, the ASX retail share is down 60% to 12 cents. Why is this ASX share crashing 60%? Investors have been selling the plus sized women's fashion retailer's shares for a couple of reasons today.
The first is the release of a very disappointing that was announced last week. That update revealed that its group sales for FY 2024 are expected to be down ~30% to $187 million. Things are worse for its forecast pro forma adjusted EBITDA from continuing operations.
That is expected to be a loss of $9.3 million for the 12 months. City Chic's earnings guidance excludes the Avenue and Evans businesses.
The US based Avenue business is being sold to Fullbeauty Brands for US$12 million (~A$18 million), subject to working capital adjustments at completion. This compares to its purchase price in 2019 of US$16.5 million Whereas the Evans business was sold earlier in the financial year.
Once again, at a significantly lower price than what management paid to acquire it. Management notes that these divestments align with the company's strategy of focusing on the core City Chic customer in ANZ and the US. Completion of the Avenue sale is scheduled to occur in July 2024.
What else? Despite its abject trading performance and acquisition record, the ASX share has been able to raise money from investors through a . However, unsurprisingly given the state of the company, it was forced to do so at a huge discount to the prevail.
