City Chic has announced the sale (exit) of its UK and European business for A$12 million. This a modest price given it paid close to $50 million, but it does simplify the group and further improves its net cash position. We lift our EBITDA (pre AASB-16) in FY24e from -$6 million to -$1 million. Medium term, we have lowered our EBITDA by close to $3 million, indicating a 4x multiple for the exit. The strategic review clearly signals a focus on simplicity for City Chic and there is sufficient upside in the Americas and Australia/NZ for the group. Its net cash position also adds to the appeal and is a key feature of our positive rating.

Harvey Norman delivered a solid 1H22 result with sales down 6% and profit before tax down 21%, excluding property revaluations. Earnings improved in the final two months of the half as lockdowns eased. The company has good control on costs and inventory levels are lean, but not short. We forecast FY22e PBT down 15%, which implies a smaller 2H22e earnings decline.