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City Chic Collective Ltd (ASX: CCX) caught the wrath of investors on Tuesday, sliding around 9% in the red before its shares were put on halt. Before the halt, the ASX retail stock was swapping hands at 30 cents apiece.
The moves today come after an announcement from the company in early trade requesting the halt. Reports have also surfaced that a large investor billionaire raised their stake in the struggling plus-sized women’s clothing retailer, although this is unrelated to the halt.
This year to date, the ASX retail stock has slipped 45% into the red, having collapsed from former highs of 60 cents on 13 February. Let’s take a look.
ASX retail stock halted
City Chic has entered a trading halt ahead of an announcement regarding two updates. The first was to do with the potential divestment of its Avenue arm. The second is related to a new equity raise.
The company plans to complete a fully underwritten institutional placement and a pro-rata accelerated non-renounceable entitlement offer to raise capital.
Whilst not entirely clear, it requested the halt remain in place until next Monday. Before then it will likely reveal more on the planned disposal of its Avenue arm.
City Chic expects to make an announcement to ASX in connection with the proposed divestment of Avenue and an equity capital raising to be undertaken by way of a fully underwritten institutional placement and a fully underwritten pro-rata accelerated non-renounceable entitlement offer of new fully paid ordinary shares in City Chic
If the company makes such an announcement before Monday, trading of its shares will resume.
Reports have also surfaced that billionaire Brett Blundy has increased his stake in the company, according to reporting from The Australian. Blundy’s BBFIT Investments recently acquired 3.3 million shares, boosting his ownership to 11.3%.
The billionaire’s increased stake is sparking speculation. His latest purchases were confirmed in an announcement last week, bringing his stake up from 9.9% at the end of March 2023. Back then, speculation was that Blundy would drastically increase his stake after raising it to the 9.9% level.
Foolish takeaway
City Chic’s focus is in the plus-sized fashion business. The company differentiates itself in this segment across the Australian, South African, European and New Zealand markets.
It has brands such as Navabi, Evans, its namesake City Chic, and the potentially soon-to-be divested Avenue under its wings.
Analysts at Bell Potter remain optimistic about City Chic, maintaining a buy rating with a price target of $0.62.
As to billionaire Brett Blundy’s increased stake in the company – some are speculating it could signal new confidence in the retailer’s potential.
This would be welcomed. In the last 12 months of trade, shares in the ASX retail stock are down 9% and have underperformed the benchmark by 16% in the last year.