City Chic’s trading update for 1H25e shows an improvement in sales compared with six months ago, but ongoing challenges in the US and operating losses. We expect better profit margins in 2H25e given cost savings and more full-priced sales. However, we are more cautious on the sales outlook. Fundamentally, City Chic has stabilised its business, but the prospect for decent profit margins is still some way off. 

Over the past decade, retail rental growth has been less than sales growth for many ASX-listed retailers. Can this trend continue? In Issue 8 of Price Watch, we analyse floor space supply and demand. We expect retail supply per capita to fall by 0.7% p.a and retail demand to rise by 0.5% p.a. This is a meaningful disconnect placing upward pressure on rents. We expect half the gap to be solved through productivity initiatives by retailers and landlords to work floor space harder and reduce anchor tenant space. The retailers with the highest exposure to the top 30 shopping centres are Accent Group, Premier Retail, City Chic and JB Hi-Fi.