Well, good afternoon, ladies and gentlemen. My name is Michael Kay, and I am the Chairman of City Chic Collective Limited. On behalf of the board, I welcome you to the 2026 Annual General Meeting. I am pleased to see some of our shareholders could join us today. For those who have not been able to join us, the meeting is being recorded. The audio webcast is available to listen to live and will be accessible after the meeting concludes by following the link on our investor relations website. I note there is a quorum present, and I declare the meeting open. I would like to start by introducing the Directors and other officers of the company. Starting on my right, Phil Ryan, the company's Managing Director and Chief Executive Officer, and the Independent Non-Executive Directors, Natalie McLean, Neil Thompson, and welcoming our newest Director, Eric Morris.
James Plummer, our Chief Financial Officer, is here with us today, as is Jacquie Shanahan, our Company Secretary. We also have with us David Friend, who is representing the company's auditors, RSM, and who will be prepared to answer any questions about the conduct of the audit. We also have representatives of MUFG, our Share registrar, who are acting as returning officer for the purposes of the meeting. Before moving to the formal business of the meeting, I will take the opportunity to give you a brief overview of the 2026 financial year. I will then invite our CEO and Managing Director, Phil Ryan, to provide more detail on our operational performance in 2026 and an update on trade for the year to date, as well as his plans for the future of the company. I will now deliver my address.
Ladies and gentlemen, the key takeaway from this AGM and the outlook for FY 2027 is that despite the worst consumer environment in 40, in fact, I read in the newspaper yesterday, it is 50 years, and in a market where many retail companies in Australia, indeed all over the world, are struggling with adverse economic conditions, City Chic's performance has not only stabilized from several difficult years, but is also now generating sustainable earnings and cash. Our CEO, Phil Ryan, will take you through this in more detail, but suffice to say, this has been a difficult and all-encompassing task. Over the past few years, we have reported to shareholders on the right-sizing of the business to take account of a reduction in demand as the cost of living crisis worsened. The reduction in expenses has been material and painful, but necessary.
A total of AUD 29.3 million has been taken out of the cost base over the past three years, representing a reduction of almost 30%. We have also reported to shareholders on the honing of our strategy to bring an ever-greater focus on fit and fabric quality, whilst also, to use our internal mantra, meeting her where she is at. That means, of course, understanding that as inflation reduces real wages and therefore discretionary spend, we need to present a range of products that are fashionable, that fit, are of good quality for the price, and therefore good value for money when money is tight. Thanks to the tireless work of our product and sourcing teams, we are now succeeding in delivering this at good margins. Most pleasing of all, our customers are responding.
You've all seen the numbers for FY 2026, which was really a year of transition, finishing the cleaning and right-sizing of inventory, getting off the discounting drug, more agile and cost-competitive sourcing, and refining our approach to product and marketing. The management team has looked at every inch of the business, seeking incremental improvements to the cost, quality, and timeliness of the delivery of our products and services. These actions delivered tangible results in FY 2026. Trading gross margin increased 209 basis points to 60.6%, inventory reduced by 11%, and the cost base reduced by a further AUD 7.1 million, helping to drive a 92% increase in underlying EBITDA. While online is always susceptible to the consumer's expectation of a discount, we are holding our nerve and maintaining pricing at profitable levels, with selected discounting being used simply to clear less appealing stock.
Online margin finished FY 2026 up 300 basis points compared to the prior year and is already up 330 basis points in this financial year to date, and we are seeing volumes recover into the latter part of the first half. The most pleasing success story over the past six months has been the stores. Shareholders will recall that stores had been struggling, and they are now the standout channel with trade to date this year beyond our expectations. All stores are comping at 15.4%, and most pleasingly, the full-price stores are comping at 19.6% at a consistent trading margin. In the U.S.A., we are also seeing encouraging signs on our website. The business is profitable, and we're particularly pleased with the growth in new customers, demonstrating that the City Chic brand continues to resonate in this important market.
At the same time, the reset of our approach to pricing and promotions is delivering a significant improvement in gross margin, up 1,060 basis points on the prior corresponding period, creating a healthier and more sustainable foundation for growth. The combination of profitability, new customer growth, and materially stronger margins gives us confidence that the U.S. business is moving in the right direction. More generally in the market, we're seeing smaller online brands in difficulty and closing down, and not just smaller brands, as you all know. We're also seeing larger brands such as H&M withdrawing or reducing their plus-size inventory. The size inclusiveness push over the last few years seems to be waning as broader retailers come to terms with the particular and unique issues in profitably designing and manufacturing for curvy customers.
This evolving reduction in competition is probably assisting us now and hopefully will build into the future as we stay focused on our niche. That said, as shareholders know, we are also extending our sizing both up and down. As Phil will demonstrate, this has been a success. However, our focus on the smaller sizes still targets curvy customers who have particular fit requirements. Additionally, having extended sizing means we can follow our customers who are on the GLP-1 journey and whose sizes are therefore prone to change, both up and down. Wherever she is on her journey, City Chic is there with her, responding to her needs and making her feel fabulous. Now, ladies and gentlemen, I'm particularly pleased to welcome Eric Morris to the board. Eric is one of Australia's most experienced retail executives and brings a unique combination of retail, customer, and digital expertise.
As City Chic transitions from turnaround to growth, Eric's experience building and scaling brands across multiple channels and markets will be tremendously valuable, and I am genuinely excited about the insights, perspective, and experience he will bring. Welcome, Eric. Finally, shareholders need no reminding that the last few years have been extremely painful. While we would all have wanted to make the recovery happen more quickly, I can assure you there has been no shortage of blood, sweat, and tears from the management team, who have exhibited remarkable resilience and perseverance under great pressure. The board and I are delighted for them, but more particularly for shareholders, that the painstaking reset of the business is now starting to produce results in the most difficult of retail markets. Of course, there remains much more work to do.
Demand and revenue, now the business is reset, are the key issues and are the focus for the 2027 financial year. With the business now in a good operating rhythm, demand and revenue will provide us with the leverage to restore economic value creation to historic levels, and that is the task for 2027. Now, it is now my pleasure to introduce our CEO, Phil Ryan, to present his review of FY 2026, an update on current trading and operations, and the outlook for 2027.
Thanks, Michael, and good morning, everyone. I would also like to welcome all shareholders joining us today. I want to start with our most recent trading performance because it provides clear evidence that our strategy is delivering results. Our stores are trading strongly. For the first 18 weeks, as Michael said, comparable store sales increased 15.4%, with full-price stores up 19.6%. And importantly, this growth came from higher margins and less promotional activity. Full-price stores are the key driver of City Chic's profitability. With much of the store base fixed in costs, stronger full-price sales and higher margins translate quickly into improved earnings. Customers are responding to the improvements we have made in both product, quality, and value. And this improvement isn't limited to stores.
In our Australia and New Zealand online business, trading gross margins up 200 basis points in the 18 weeks, and October sales matched last year as we reset the business and are at even stronger margins. In the U.S.A., while sales are still below last year, comparable trading gross margin dollars were up 7.1%. And with its variable cost base, the U.S.A. continues to trade profitably. I will talk more about that later. Given the challenging retail environment Michael mentioned in Australia, this performance is pleasing. It demonstrates the strength of our brand and gives us confidence we are on the right path. We still have the important Black Friday and Christmas trading periods ahead, but we enter them with encouraging momentum and disciplined inventory and much better underlying economics.
This all builds on the progress that we made in FY 2026, and today, I'll briefly take you through that process, the strategy behind it, and how we are building a more sustainably profitable City Chic. FY 2026 was another important year for us, and I'm very pleased with the progress we've made. Underlying EBITDA increased 92% to AUD 12.3 million. Our revenue in Australia and New Zealand grew 7.6%, and trading gross margin dollars increased 8.2%. Our trading gross margin improved 2.1 percentage points to 60.6%, moving us closer to our targeted 62%. This came from better product, stronger sell-through, higher average selling prices, and tighter promotional discipline. But importantly, it all starts with a stronger focus on our customer. We listened to her, understood what she wanted from City Chic, and continued to shape the brand around her.
We also reduced the cost of doing business by AUD 7.1 million while continuing to invest in our customer, our product, and the capabilities we need for growth. We generated AUD 2.2 million of positive cash flow and finished the year with no drawn debt and extended our facility through to March of 2028. FY 2026 gave us a much stronger platform to grow from. We improved the product, the brand, simplified the business, and strengthened the economics. What is particularly encouraging is that we are now seeing that translate into a stronger start in FY 2027. The operating leverage is becoming clearer, particularly through the stores. The momentum we're seeing gives us a confidence that the strategy is working and there's more growth ahead. At the center of City Chic is our customer. We finished FY 2026 with a record 517,000 active customers.
Our base grew despite cost of living pressures on annual spend, and traffic to our Australian website increased 12.6% during the year. That engagement matters. It tells us she's responding to the evolution of the brand and product, and it gives us a clear opportunity to increase frequency and annual spend as confidence improves. Our competitive advantage is a combination of deep customer knowledge and our Cut for Curves expertise. We understand her fit and fashion frustrations, designed specifically for her shape, and engage with her across stores, online, and selected partners. We now have a simpler, more scalable platform. That means revenue growth can translate more effectively into profit. Our strategy remains consistent, built around three clear pillars: Her First, Cut for Curves, and Simpler Business. This focus has delivered results. Her First is about deepening our relationship with the customer.
She has more choice than ever, as Michael mentioned before, so City Chic must remain the brand that understands her, fits her, and makes her feel confident. Cut for Curves is our fit promise and our strategic advantage. It guides how we design, fit, buy, and range our product. The response to the spring and summer, particularly in stores, shows the value of the improvements we have made to all of these items, as well as the change in our assortments and our price points. Our simpler business is just about cost and capital discipline. We've right-sized the operation, reduced fixed costs, and cemented our discipline around inventory, promotions, and most importantly, store profitability. These three pillars work well together. A deeper understanding of our customer helps us create better product, while a simpler business allows stronger sales and margin to translate more effectively into earnings.
Our focus now is to build on that progress and deliver profitable revenue growth. In Australia and New Zealand, the opportunity is to unlock more customer spend while recognizing the environment she's shopping in. Our customer remains value-conscious, with cost of living pressures continuing and potentially only getting more challenging. We have reshaped the range to give her value from the onset, rather than relying on deeper and more frequent promotions. That does not mean we are compromising what we see as the City Chic quality. It means we are changing the price point mix and the architecture to make the range more accessible, broadening the casual assortment, and ensuring the right product is in the right store and in the right channel. We are also extending our sizes into part of our ranges into size 10 and 12, where our fit expertise can solve real customer needs. That is small, but it is important.
There has to be a reason for us to be able to win in those sizes. These sizes are already contributing 8% of our sales in our stores, and at strong gross margins. This is attracting a new customer, which is really important because it gives us another building block for growth. The early response to our spring/summer or first half range gives us that confidence in the changes and adaptions we have made. Customers are responding to better product, clearer value, and less discounting, and we are seeing that come through in both sales and margins. This gives us much confidence there is more growth available in Australia by both attracting new customers and increasing the spend from our existing ones. Moving to the U.S.A., the tariff disruption is behind us. Our focus is now rebuilding our scale in a controlled and profitable way.
Can we move the slide deck forward one, please? We want the City Chic U.S.A. business to become the dress authority for curves, using our fit expertise in a category where the addressable market is materially larger than the ANZ market. We are investing behind proven winners in both shapes and categories and fabrications. We are increasing our customer acquisition where returns meet our expectations and building out our community through the influencer and affiliate networks that we believe can create the belief that we need to have in the brand for it to be successful. The new winter collection is gaining traction, and U.S.A. online is trading at more than 10 percentage points above prior corresponding period in margin.
Reshaping that demand takes time, and we have applied our learnings from the summer range we had in Australia into the U.S., and we have really maximized the product that performed well in Australia. While sales remain below last year, the business remains profitable and comparable trading gross margins up 7.1%. The focus remains disciplined growth. We will protect margins, invest behind what works, and rebuild the momentum. We are not just selling dresses, we are building the dress community for curves. With digital acquisition and authenticity, but authentic authenticity at its heart. We are also investing in AI across the business. It is now a must-have capability, and we are well advanced in how we are implementing it in what I see as very practical ways. Our focus, though, is on making better decisions, moving faster, and improving our supply chain agility.
Digital pattern-making and fit tools, together with better supplier communication, can reduce lead times and get product to customers faster. We are already using tools that can take a product image and generate a pattern and give fabric recommendations. Our SeeStone partnership is supporting buying and merchandising by turning product images through historical data into accurate sales forecasts. We are also using Claude across our data to amplify the team and improve decision-making. Retail is detail, and AI allows us to review a volume of detail that was previously almost impossible, or at least it would have cost too much to do. It is also helping us identify demand signals and improve the customer journey and create constant content and more efficiently while maintaining our established brand voice. Excuse me. I lead our AI Champions Network across City Chic.
It brings practical learnings together and helps us scale the opportunities that we can deliver, giving us the greatest value of all the learnings we have got across the business. This is not technology for technology's sake. It is about faster and better decisions, shorter lead times, lower risk, better customer experience, and a leaner, more scalable business. Human judgment remains essential. Our team bring the customer understanding, creativity, and commercial experience needed to turn these tools into better outcomes. Moving to the trading update. For the first 18 weeks of FY 2027, group comparable sales increased 1.2% and comparable gross margin increased 5%. Excluding the discount and wholesale business, group revenue was 1.7% down, while gross margins increased 2.2%. The standout result is our stores. As mentioned earlier, ANZ comp stores increased sales of 15%, with full-price stores up 19.6%.
Total store sales increased 7.5% despite operating seven fewer stores than we did last year. ANZ online comparable sales were down 7.4%, and that really represents our planned resetting of activity on our website. That reset began in August and initially had a material impact on sales. Since then, sales have recovered, with October back up last year with significantly stronger margins. The trading gross margin increased 200 basis points, while the better sales mix and lower fulfillment costs are supporting the earnings growth. In the USA, comparable sales are down 12%, while comparable trading gross margin dollars increased 7%. The winter collection gained traction, and online trading gross margin delivered more than 10 percentage points increase. The business remained profitable and is well set for the key trading position. Across the group, our trading gross margin increased 240 basis points. Costs remain tightly managed and aligned with trading.
Together, these improvements are delivering a materially more profitable business. We remain on track to end the first half with positive cash and no drawn debt. We also expect positive first-half EBIT, subject to, obviously, the sales momentum continuing through Black Friday and into Christmas. These are important trading periods ahead, but the performance to date gives us confidence that the strategy is working and we are building a sustainably profitable City Chic. I want to thank the whole team because I know it has been a huge effort. This progress really reflects the hard work, discipline, and most importantly, the commitment to our customer. I would also like to thank the board for its ongoing support and guidance, and I would like to extend my welcome to having Eric on the board.
Having someone like him as a support for me, I am very, very lucky to have that, Eric, and we are glad to have you on the board. I would like to thank our customers for their loyalty, and most importantly, our shareholders for their continued support. I will now hand back to Michael.
Thank you, Phil. Okay, turning now to the matters formally before the meeting. As the notice has been circulated to shareholders, I propose to take the notice convening the meeting and the items of business as read. Shareholders will be given the opportunity to ask questions in relation to the business of the meeting, including the resolutions that are being put to the meeting during the course of the meeting and before any vote is conducted. Shareholders will also be given the opportunity to ask general questions about the business and operations of City Chic, not specifically related to the items of business, but that will occur at the end of the meeting. If you have questions that do not relate to an item of business, please, we ask that you save those questions until the end of the meeting.
You have all been issued with attendance or voting cards, and when I call for questions, those with yellow or blue cards are able to ask questions. If you would like to ask a question, please raise your yellow or blue card, wait for an attendant to bring a microphone, then please stand and state your name so we know who you are, and then you can proceed to ask your question. If you happen to be holding a red attendance card, that means you are a visitor and not a shareholder, and as a result, you do not have the right to ask questions or make comments.
For shareholders and proxies, I will ask you to confine your questions to matters relevant to the particular resolution that is being considered, and I will do my best to answer them or direct them to the auditor or a member of the board or executive team as appropriate. After questions, where there is a resolution to be put to the meeting for a vote, I direct that a poll will be held and now open the poll on each of the resolutions one through five. A representative from MUFG will act as returning officer and scrutineer for the poll. If you are here today both as a shareholder and a proxy, you will need to use separate voting cards in relation to your own shares and shares that you are holding as a proxy.
The blue cards are non-voting cards which are issued to shareholders who have already voted by proxy and to joint holders who can speak and ask questions at the meeting. If you hold a yellow card, this is for voting as a shareholder and/or as a proxy holder, including as represented by a corporate representative, attorney, or proxy, where the vote is at the proxy's discretion. You will be asked to vote at the appropriate time on resolutions to consider the adoption of the remuneration report for the 2026 financial year, the re-election of Neil Thompson as a Director, the election of Eric Morris as a Director, the grant of performance rights to the CEO, and a conditional spill resolution. All the resolutions are ordinary resolutions. These resolutions will be passed by a simple majority of the members present and voting in person or by proxy.
For those of you holding yellow cards, to fill these out, you will find instructions and all resolutions are printed on the front of the voting cards. To vote, simply place a mark in one of the four against or abstain boxes for each resolution, and if you mark the abstain box, your votes will not be counted for that resolution. If you need to leave for whatever reason before the end of the meeting, please make sure you put the completed voting form in the poll box at the registration desk by the door, and I encourage shareholders and their representatives to complete the yellow voting cards after each resolution has been discussed.
At the conclusion of the meeting, please ensure that you have marked your votes for the respective resolutions, and a representative of MUFG will collect the voting cards after all resolutions have been discussed and voted upon. If you need assistance at any time, please signal to one of the MUFG representatives, and we will now then move to the ordinary business of the meeting. The first item of business on the agenda is to put before the meeting the annual report of the company and its controlled entities for the 2026 financial year, including the financial statements and the reports of directors and the auditor of the company. These documents have been made available to shareholders and are also available via the ASX and the company's investor website. There is no vote required on this item of business.
I now invite any questions in relation to those reports, including any questions of the company's auditor relevant to the conduct of the audit, the preparation and content of the auditor's report, the accounting policies adopted by the company in relation to the preparation of the financial statements, and the independence of the auditor in relation to the conduct of the audit. If you have any questions relating to the resolution, please wait and ask your question when we consider that resolution. Are there any questions regarding the reports or for the auditor? As there are no questions, we will move to the second item of business. Resolution one is the adoption of the remuneration report, which is included in the director's report in the annual report. In accordance with the Corporations Act, the vote on this resolution is advisory only, and the outcome is not binding on the board.
Of course, that's not to say the board doesn't take these resolutions very seriously, and the board will consider the outcome of the vote and feedback from shareholders at this meeting when considering the company's remuneration policies. In the remuneration report, we've endeavored to provide shareholders with detailed disclosure regarding the terms of and rationale behind the company's remuneration framework for FY 2026. We believe that the approach provides good alignment between business objectives, shareholder value, and executive remuneration, which motivates and retains our talented executive team. As outlined in the remuneration report, shareholders will have noted that all of the non-executive Directors' reduction in remuneration agreed in FY 2023 has continued through 2024, 2025, and 2026, and the CEO, as shareholders will recall, also agreed to a reduction in his fixed remuneration in the FY 2024 year, and this has remained in place in 2025 and 2026.
Are there any questions in relation to this resolution? Noting that each Director has a personal interest in their own remuneration from the company as set out in the remuneration report, shareholders are asked to adopt the remuneration report and vote in favor of resolution one. The proxies received in relation to this resolution prior to the meeting are now shown on the screen. For proxies open at my discretion, I intend to vote in favor of the resolution. That was a Freudian slip. We'll now pause for a moment to give you an opportunity to complete your yellow voting card. Please retain your voting cards, which will be collected by representatives of MUFG once voting on all the resolutions on your yellow voting card has been completed.
We'll move to resolution two, which is the re-election of Neil Thompson as a Director, as Independent Non-Executive Director of the company. Biographical information. That's another Freudian slip. Biographical information about Neil is available in the notice of meeting. Neil joined the board in August 2021 and was re-elected to the board in 2023. He's an Independent Non-Executive Director, the Chair of the Audit and Risk Committee, and a member of the People, Culture and Remuneration Committee. Neil has over 30 years of financial, operational, and strategic experience from a broad range of roles and industries with global reach, including freight and logistics, industrial products, and software sectors. In July 2026, Neil was appointed Acting Chief Financial Officer of Beamtree Holdings Limited, an ASX-listed global AI health technology company.
He's also currently a Director of the Australian World Orchestra and a Director of ASX-listed ReadyTech Holdings Limited. He also serves as a Finance Operating Partner with Australian private equity firm Potentia Capital. The re-election of Neil is unanimously recommended by the board, with Neil abstaining. Are there any questions in relation to this resolution? If there's no questions, the proxies received in relation to this resolution prior to the meeting are now shown on the screen. For proxies open at my discretion, I intend to vote in favor of the resolution, and I'll now pause for a moment to give you an opportunity to complete your yellow voting card. The next item on the agenda is resolution three, the election of Eric Morris as an Independent Non-Executive Director of the company. Biographical information about Eric is available in the notice of meeting.
Eric was appointed as an Independent Non-Executive Director on 7 September 2026. Eric is a member of the Audit and Risk Committee and the People, Culture and Remuneration Committee. With more than 35 years of experience across retail, consumer goods, and digitally enabled businesses, Eric was the founder and former CEO and Managing Director of the PAS Group, which he grew through acquisitions and mergers, and ASX listing to become one of Australia's largest apparel and footwear businesses with 26 brands, more than 350 retail stores, and a substantial online and wholesale presence. He is currently Chairman of eStar Online and Litecard, and is also an advisory board member of Belgravia Apparel Group and Warwick Fabrics. The election of Eric is unanimously supported by the board, and recommended with Eric abstaining. Are there any questions in relation to this resolution?
Michael, just one quick question for Eric. I just wondered if you could provide just a little color or detail around the potential you saw in City Chic, why you were interested in joining, and I guess how you think maybe for the future, how do we restore our fortunes, and what is the potential that we have as a business to take it somewhere? Have you got any early thoughts on that? Sorry to put you on the spot.
No, it is good.
Can everyone hear me without the mic? Should be okay. First of all, obviously, stepping onto the board of City Chic, I saw great potential in the business. I have been following it for a number of years from the sideline, as I have been following a lot of the other listed businesses on the ASX. Why do I think it has got potential? I think businesses which have a niche position in the market have certainly got much more opportunity than others. I think if you look at some of the challenged businesses which are out there right now, when they lose their position in the market, they have got nothing to offer. In the City Chic space.
I think the opportunity there, and what I like about it, and they call it Cut for Curves, which is obviously a specific skill set, as opposed to a lot of businesses in the space who've just extended their size curves into larger sizes. I can tell you from my experience, that doesn't work. The proportions are different. It's not just, as we call it in the industry, grading up in terms of size curves. I see the opportunity there. I know the challenges that the business has had over the last few years, and firmly believe that with the right approach to it, we can regain a major market position and continue the success of the organization. If that answers the question, then that's the reason why I joined the board.
Any other questions on that resolution? The proxies received in relation to this resolution prior to the meeting are now shown on the screen. For proxies open at my discretion, I intend to vote in favor of the resolution, and will now pause for a moment to give you the opportunity to complete your yellow voting card for resolution three. The next item on the agenda is resolution four, the proposed issue of performance rights to Phil Ryan. As outlined in the notice of meeting and in the context of the cancellation of historic long-term incentives and other commentary on short-term incentives, the board believes it is in the best interest of the company and shareholders to grant Phil the proposed FY 2027 performance rights with an EBIT performance condition measured over a three-year period.
If approved, the proposed FY 2027 performance rights form a significant component of Mr. Ryan's at-risk remuneration and are designed to align his interests with those of shareholders over the longer term. Vesting is subject to the achievement of challenging EBIT-based performance hurdles measured over that three-year period, ensuring that value is only realized if sustained improvements in the company's financial performance are delivered. The board believes this grant creates an effective alignment between Phil and shareholders and is the appropriate incentive to encourage focus on generating free cash flow, enhanced profitability, and driving shareholder value over the longer term. The resolution seeks to obtain shareholder approval for the purpose of ASX Listing Rule 10.14 for the grant of performance rights under the equity incentive plan to Phil Ryan on the terms outlined in the notice of meeting.
As outlined in that notice, the performance rights will only vest, and Mr. Ryan will only receive these shares upon vesting of all or some of the rights if the stated vesting conditions, being the performance and service conditions, are achieved. The non-executive directors believe that the proposed grant of performance right to Phil is appropriate and in the best interest of the company, and therefore recommend that the shareholders vote in favor. You will note there are some voting exclusions applicable to this resolution as set out in the notice of meeting. Are there any questions concerning this resolution? The proxies received in relation to this resolution are now shown on the screen, and for proxies open at my discretion, I intend to vote in favor. We'll now pause for a moment to give you the opportunity to complete your yellow voting card for resolution four.
Okay, we will now move to the last item on the agenda, resolution five, which deals with the holding of a spill meeting. I am advised by MUFG that the results of resolution one will not be finalized until after the poll closes, and as such, it remains unclear whether less than 25% of votes cast on resolution one were against the adoption of the remuneration report. In those circumstances, resolution five is required to be put to the meeting and voted on in accordance with the Corporations Act. In the event this item is passed, it will only be effective if, once the formal results of the poll conducted on resolution one are settled, at least 25% of the votes cast are against the adoption of the remuneration report. The details of this resolution are set out on page 17 of the notice of meeting.
The Directors unanimously recommend shareholders vote against this resolution. You will note there are some voting exclusions applicable to this resolution as set out in the notice of meeting. Finally, are there any questions relating to this resolution? Okay, the proxies received in relation to this resolution are shown on the screen, and for proxies open at my discretion, I intend to vote against the resolution. I will now pause for a moment to give you the opportunity to complete your voting card. This is the last of the resolutions to be considered at the meeting, so once you have completed your voting card, please provide it to the representatives of MUFG, who will, I think, Jacquie, come around to-
I will collect all the way out, Mr. Chair. I will stand at the doors, people leaving.
Okay. Well, I am just about to declare the poll closed, so I just want to make sure everybody has voted. Oh, no, he is going to collect them. All done? All dealt?
Just a poll.
Okay, I will now declare the poll closed. As the counting of the votes on the poll may take a little time, we will announce the results via the ASX as soon as possible after the meeting. Ladies and gentlemen, that concludes the formal business of the meeting. On behalf of the board, I would like to thank you for your support and attendance, and I now declare the meeting closed. We will now take the opportunity, or give you the opportunity to take any general questions about the company not related to the items of the business. Are there any general questions? Andrew.
Look, I guess it was just a general question. Michael, I think we find ourselves in a position now where we are an absolute minnow micro-cap. I think really, to all practical purposes, barring for the sake of new institutional investors or larger retail shareholders, we are uninvestable. I think that is my take. I believe most of the heavy lifting has been done. I think we are well-positioned, but I just do not know how we win the confidence or the trust back of the market. I guess I was just wondering if you guys, I mean, just a quick test quick. Our market cap is just over 14 million. I think our inventory and cash balance is double that. I mean, that just says it all. Let alone any future potential of the business to generate profits or growth. That just speaks volumes to me about where we are in the market.
We are just in kind of limbo and in purgatory, investor purgatory.
An unloved stock in an unloved sector.
Yeah, that is right. I guess I was just wondering if, and it is an open question for the board and yourself or anyone that has any thoughts, how do you see us? What is the pathway out of investor purgatory? How do we get back? How do we make ourselves to be deemed of investment grade again, and it is something capable of.
Have you been sitting in on our board meetings, Andrew? It is absolutely the right question. I had this experience in another place where I took over as CEO from a founder of a business that had done really well, was a listed company, but it made some errors and went into the naughty corner. There were two things that needed to be done. The first was to fix the things that were not quite right, and that always takes a bit longer than you hope it is going to take.
As soon as you gain the confidence that the business was back into profitable growth and moving along as you would want it, that is when people go, "Well, people know where this company has been before." Yes, it is a tough retail market, but we are doing okay right now, and we are doing better as each day and week goes past for all the reasons that Phil was talking about. I think we will have something to go back to the market with, and that was the task I had as the CEO of that business, to reinvigorate the interest of people in the business, and that is Shoe Leather.
I see Matt up there. In fact, when we started, when I started at this business, Matt, who looks after our investor relations, remember, Phil, we had that meeting, and our share price was very low because of all the SFG problems. We said, "Matt, we think we've got a good business. You've got to get us in front of some people." Of course, we know the history of that, and the business went very well. That is the task.
Very soon, Matt will be knocking on your door and saying exactly the same thing, because there's one investor who I know very well and who made a lot of money out of our business here, and the previous business I was talking about said, "Look, it's been bad, but I've been out of it for a while." But he said, "I'm ready to come in as soon as that business is reset and making a move. I don't mind if I miss the first 10% because this could be a 10-bagger if you get it right." I think that's the sort of line of country that we have to go down.
But the critical part was fixing the business and to have to Yes, we made some mistakes, and then we got poleaxed by the cost of living problem, and the fact the guys have got the business to its current state gives me a lot of confidence that we'll be knocking on that door. That's the plan. It's not the only plan, but it's plan A. Anything my colleagues want to add to that?
Probably the same, Andrew. We just have to, as you and I have spoken about, rebuild profitability, and that's all of our focus right now. That's the share price, and the others will take care of itself. Once we have something to say, as Michael said, we understand that path and how to do it. Its first step is, all right, we've had a good couple of months, let's keep that going for another 12 months, six months, in perpetuity, and then come out and tell the story.
I think if we can get through these times, the retail winter, we are in pretty good stead for the other side. It is just-
Andrew, our customer has not left us. We have more customers than we have ever had before. The annual spend really reflects how she is feeling right now, right? To be so, you can work the numbers out, and you can get the money customers by revenue, it is not that hard. If you compare it to where it has historically been, that is where we have hurt. We have probably crossed back a little bit in the last sort of three or four months. Then it is about, yeah, just as she feels better, getting more, but then also making sure we are maximizing all our opportunities online, how we are talking to our customer, and what we are doing. I think I said in my speech, really, this all came from us listening to her, adapting to, meeting her where she is at, and then making sure we are building our range around that.
Tony.
Sorry, just a response you asked about. My personal take is balance sheet assets are great, but in a retail environment, it could be worthless if you are not making money. So, we are talking EBITDA curve being positive. The market wants to see money being made. There are no two ways about it. It needs to see profit. Things will follow from there once the confidence returns, I think.
Probably get a few runs on the board.
There is a perfect opportunity, maybe too early, but this time next year, I would like to be talking about buying stock back and fixing the register again, assuming there is sufficient funds for growth and those sorts of things. But this is the time that you do it. 390 million shares on issue. You said 16 million market cap. It is the perfect opportunity to buy 10%, 15%, 20% of stock back with trading at this level. But we will come back to that-
Yeah.
At another time. Lots of water has to go under the bridge before we get there. My question, Michael, extends, is on the U.S.
Just to give, I guess, Phil the opportunity just to talk to it.
Sure.
It has been talked about for a very, very long time, and City Chic was there well before many other Australian women's apparel retailers.
That is true.
Have entered that market and succeeded really well. So, it is 2026, 2027, trading there for probably well over 10 years. Annual revenue is sub AUD 15 million in the U.S., or 20 now?
We publicized that, don't we? Yeah.
Perhaps if we could just hear about the strategy and the specifics to it, in fact, and how we get that executed and getting it moving.
Yeah. Thanks, Tony. I think I've put in the deck at the half, at the full year, and I repeated it again here. What we are really doing is trying to own that curve dress market in America. That market itself is much bigger. To do it not through lots of product, lots of way, but through becoming more than that, but a community for curve dresses. Investing not only in Australia, in America, but in Australia and the brand, and that becoming someone that owns that part through community, all that kind of events, the connection with the customer, and then really driving behind it as we see acquisition in the U.S. Our product, we've had a long history in the U.S., up, down, and turning around. Most retailers I know that have gone to the U.S. haven't been successful.
We're one of the few that over time has stayed. The first step was to get a profitable. I remember two years ago, I think it was, Tony, where I was going to make it my job to get over there and do all that, and that was the plan. Then we had to turn a container back due to all the challenges. I think we've just-
The tariffs.
Gotten over that now. Yeah. Try not to mention them all. We're just getting back over that now. It has probably, same as Australia, it's taken a bit longer. Not putting new inventory does mean we've promoted. Now this became much more promotional-driven, and we're really trying to get away from that. We set a few key performance indicators that I report up to board every month, trying to get two headline numbers that focus around margin, similar things to what we're talking to you guys, the customer numbers that you guys will see that drive that, and new customers, and then how we're getting them and how we're acquiring them. But I think we have to make sure that's built on a base of strong content around dresses and then owning that kind of market.
You've probably seen, because I think you're more on our socials than I am, Tony. The amount of user-generated content in our CC USA site is materially more than it has been. There's a lady by the name of Laura Clifford, she did the Rebecca Border this week, the black dress with the floral placement at the bottom, pleated one. I don't know if you saw it. She sells, right? Now, what we've got to find is dresses, people, and things that we can just grow that. That's one. There should be a lot of them. The reality is, you can't just go pay and make that happen. You've just got to make that happen over time and get the momentum that goes with it.
Just the last question on that. Just by the way, the organizational support structure to execute on the U.S.A., what's your take on that?
I have a committed team in Australia of about three people, four people, a senior who is a merchant. We have a person in the product team who manages product around the U.S. But really, I think I've said this before, that around 30%-40% of what we do for the U.S. is made for market, and the rest is trials of all small volumes of all the other things. I've definitely said that before. We have people who manage that. I have a dedicated e-comm team, a dedicated marketing team. All of our agency work is done out of America because I think they're better and they are more focused. Our digital agency, I think you and I have spoken about before, we've been with them a long time. Our ROAS in the U.S. is very strong, but I'm shifting it more towards acquisition.
The easiest way to get a customer is to find people who know you and then re-engage them, right? What we're trying to do is say, "All right, we believe we've got a unique position around the curves and the dresses for curves," and then really go out socially and find that lady and do that.
I think, we have people in the team and we have people on the ground, one in logistics, finance, and partnerships, right? Really all the associated with the product, driving the range, you need to be where that's created. I spend as much, probably more time with American competitors than I do U.S. competitors, and it's all Sorry, Australian, thank you, Nat. It's all there. I can see what everyone's doing, and I do most mornings. We started in 2010, right? We've had stores, we've done a whole lot, and I see it as a huge opportunity for us. It's just about how does the reset goes, how do we go? I've just got to keep rocking.
I think there's probably two other things, Tony, that I think you and I have spoken about as well, which is everybody knows the U.S.A. is an ultra-competitive market, so you've really got to be on your game to go well there. It's ever been thus. There's lots of money sloshing around, lots of people having a crack, lots of people going under, going into Chapter 11, coming out of Chapter 11, et cetera. The other issue I think we've had, which is now reversing itself, thanks to Phil and the team, is there's been limited capital to allocate to higher-risk activities, particularly with the tariffs and what have you. That's now reversing itself. The business is producing cash, and that gives us the opportunity to make the sort of investments that perhaps we were ducking before. That fair, Phil?
Yeah, very much. Tony, really, the dresses are about a narrow focus in the market, so you can put your AUD behind owning something.
I think those percentages, I'm not sure whether they're public or not, but the U.S.A. woman likes our dresses.
No, we have done the strategy based on customer information and purchasing habits. We haven't given numbers completely, but we are materially bigger dress business in America than we are as a percentage in Australia already
Well, they were great questions, right on the money, both of them. If there's nothing further, thank you very much for your attendance, and please feel free to come and have a chat and cup of tea, and we'll do it all again next year.