• 145% increase in tariffs on products sourced from China for US market
• Proactive approach to bring forward inventory to mitigate impact
• Reduced sales expectations and cost-cutting measures in US market

City Chic Collective Limited (ASX: CCX) has provided an update on the impact of increased US tariffs on products manufactured outside the US, particularly those sourced from China. The US government has announced a 145% increase in tariff rates on these products, which account for over 90% of the Group's product range. Approximately 20% of the Group's revenue is generated in the US. In anticipation of the tariff increases, the Group has proactively brought forward the bulk of its Summer 2025 range and a substantial portion of its Winter 2026 product into the US, ensuring sufficient pre-tariff inventory to sustain operations through Q2 FY26. The Group is also actively working with suppliers to manage the existing order pipeline and has paused further stock entering the US market. Marketing spend has been reduced to baseline requirements. Due to the tariff situation and its potential impact on consumer demand, US sales expectations have been reduced for FY26. However, with its predominantly variable cost structure and a further $1.5m in fixed cost reductions, the Group anticipates being able to maintain a neutral contribution margin in the short term. The Group's ANZ business has continued to grow, up 17% on the prior corresponding period, with strong customer numbers and positive traffic both online and in stores. The management team remains focused on executing the Group's strategy, driving sales, protecting margins, and delivering the planned cost reduction program to position the business for long-term success.

Due to the volatile market conditions in the USA and trading for the first 18 weeks of 2H FY25, the Group is now targeting the lower end of its previously revised FY25 financial targets of revenue between $137m and $147m and EBITDA between $8m and $12m.