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CCX - City Chic Collective

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Tommy Shelby said:
Couple factors have led to the price movement over the last week beyond the general market movements...

CCX bought two businesses last year but either didn't appreciate the logistical nightmare that is 3PL or couldn't stay on top of the growth but this has been a big reason for the inventory build up. They've hired more senior execs who have logistics experience etc to fix but that will take 6 months to resolve. I wouldn't be surprised if there were some write downs or realisations that the inventory count is wrong etc.

CCX's closest competitor in the US (I believe) is supposedly in serious trouble with a lot of debt on the balance sheet and have been slashing prices in the October sales which really caught management off guard.

Barrenjoey ran a broker's call and the feedback was management were shell shocked after the recent price decline + competitors aggressive pricing. They made a good point that the market was pricing the company like its going out of business instead of trading at like 4 x EBIT with $150m in inventory (less than the MC)

I had already acquired my full portfolio % allocation around the $1.35/share so am at that self imposed limit. Normally I'd be trying to catch the falling knife but I think this needs more time to validate if management can make this come good or if it's going to implode like the market seems to think it is.

What do you when the price halves in a week and there's not enough liquidity to sell out of your position?


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Other than my tip, I am curious to learn what made Spheria to build up their holding to more than 125 within a week's time.
Are they have different reading from market and buying on the dip or what ?
Look at the volume and swinging pendulum prices - who are selling and who are buying ?
shorting position 7.1% about indicates more fall
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City ChIc down 25% intraday following a trading update that foreshadows a small EBITDA loss for 1HFY23.
Americas region looks to be doing worst where I believe all their trading is done via website. Consumer demand there is well down.
Management says Global revenue is down 7% but gross margin is also compressed due to promotional activities.
The inventory looks high to my uneducated eye in retail matters but management says it will be within the predicted range of $168-174m.
Chart would be a risky buy but I guess down the track this might become a contrarian buy in a full recession?

Not Held
Not Buying

2 Yr Daily
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Bloodbath today with a downgrade - Black Friday Sales down 24% overall vs the two week period last year so it is impacting the AUS business line as well.

Note that inventory is currently $168-174m against a MC of $102m... this is about to be a Benjamin Graham stock ffs
 
Hilarious, dont ever talk to me about efficient markets again!
CCX down 9% today, late in the day Blundy posts a substantial holding notice and it closes 16% up!
Active stupidity.
 
Well since @Miner included a short position report of 7% back at 1 Dec the shorts have fallen considerably - CCX well out of the league ladder now.
Price jumped 16% Friday. That billionaire guy Brett Blundy raised his stock to 8.6% a week ago. His buying was pretty prophetic when he waded into Accent (AX1) way back.

Main reason for commenting is the prospective bottom trawling style chart though. I would be tempted to buy a first tranche if it falls back, based on the 'technicals'. If I thought I had any grasp of the fundamental issues confronting the company that is. I mean surely this is a contrarian type of situation with the company high in inventory, a main rival in the U.S forced to price slash due to debt*, demand and margin ebbing. But buy a past successful specialist clothes retailer when you believe a recession (at the least) and a market crash lies ahead? The fat ladies might elect to cut down on eating or refresh their old fat affirmative clothes.
*see Tommy Shelby posts

Not Held

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finicky said:
Well since @Miner included a short position report of 7% back at 1 Dec the shorts have fallen considerably - CCX well out of the league ladder now.
Price jumped 16% Friday. That billionaire guy Brett Blundy raised his stock to 8.6% a week ago. His buying was pretty prophetic when he waded into Accent (AX1) way back.

Main reason for commenting is the prospective bottom trawling style chart though. I would be tempted to buy a first tranche if it falls back, based on the 'technicals'. If I thought I had any grasp of the fundamental issues confronting the company that is. I mean surely this is a contrarian type of situation with the company high in inventory, a main rival in the U.S forced to price slash due to debt*, demand and margin ebbing. But buy a past successful specialist clothes retailer when you believe a recession (at the least) and a market crash lies ahead? The fat ladies might elect to cut down on eating or refresh their old fat affirmative clothes.
*see Tommy Shelby posts

Not Held

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Interestingly I noticed last weekend, the sales persons in shops selling apparels for specially large people, are more attractive recruits. Hope my glasses were right having replaced in Jan this year and I was not a desperate diamond looking for pearls.:)
 
CCX closed up ^8%
Changed substantial holding from Brett Blundy. Another 3m shares added on market.
 
City Chic up 22% on high volume before luncheon.
I chickened out of even a dabble in CCX but, to paraphrase what they say, if there's lots of bad news being proclaimed then it's probably already well recognised in the share price.
Catalyst was the sale of some asset (Evans) and the exit of business in the Europe, middle east and Africa region.
A Brett Blundy move should not be ignored as a harbinger.

Chart is a breakout from a pennant that was a rest after a rally?
Not Held

DAILY
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CCX @ 0.605

Even after today's rocket CCX is trading well below book value which was $0.88 at end FY22.
Past ROE suggests CCX is worth at least 2x book value if it can get over its malaise.
I haven't got round to reading the announcement but from the thumbnails I'm assuming there's nothing yet to say City Chic getting more traction in its actual business of selling clothes to female fatties.

James Gerrish's snapshot on livewire adds a bit of detail:
  • "City Chic (ASX: CCX) +28.13% ripped higher on news it’s selling its Evans brand and its Europe, Middle East and Africa inventory to AK Retail Holdings for £8m.."
 
Wow, what the .. ? Just checked out CCX @ 0.34.
In August I thought this chart was fully on the road to recovery. But most of that rally has now been given back. Shorts are still low if you follow that. Trading volume is low - it seems to me no one is buying, not that that there's pressure from selling.

Not Held

DAILY
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Blundy getting involved was a red flag for me, all the financials are dire. The question is can it survive?
 
City Chic (ASX:CCX) is expected to make a highly dilutive capital raising that existing shareholders might balk at.

The retailer, which had a market cap of $68 million at Monday’s close of 30 cents a share, is reported to be looking to raise about $25 million from investors. This implies a dilution of more than a third for existing shareholders.

The company has sold its American brand, Avenue, to a cashed-up offshore buyer. It paid more than $24 million for the online assets of Avenue pre-COVID in 2019.

The price and identity of the buyer will be confirmed in a statement expected from the company Wednesday on the price and terms of the issue.

The issue is being managed by Canaccord Genuity as lead manager. The shares have been halted until next Monday to allow the issue to be sold, indicating it could be a tough sell.

City Chic shares are down 45% so far this year.

The company has a market value of just over $68 million and, as of December 31, had just $3.5 million in cash on hand.

An interesting aspect of the issue is whether Brett Blundy, who controls Best and Less and other retail assets such as Lovisa, will participate in the raising.

Blundy’s Singapore-based BBFIT Investments purchased a combined total of 3.3 million shares on 13, 14, and 17 June. This boosted his stake from 9.9% to 11.3%. If he participates, he could contribute $2.75 million (which would allow him to avoid being diluted), but he has the resources to finance the entire issue and take control of the company.
 
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