Shares in women’s fashionwear retailer City Chic fell more than 15% yesterday at one stage as investors took fright at the news it had missed out on a major deal in the US.
The shares tumbled to a day’s low of $2.85 before fighting their way back to end the session down 6.5% at $3.16.
That wasn’t a bad result given the wider market sold off heavily, losing 1.22% or more than 70 points to put it on track for another weekly loss by the close on Friday.
City Chic Collective sparked the sell-off by telling the market yesterday that it had missed out in winning an auction for the online assets of collapsed US retail chain Catherines.
The court-run auction on Wednesday, US time for Catherines was held, in which City Chic was outbid by an unnamed party.
City Chic had been hoping to pick up the online operations of Catherines for around $16 million and had $80 million from investors in late July to help finance the move.
But the company told the ASX that the winning bid for the company was $US40.8 million ($A55.5 million), which City Chic said was too expensive.
CEO, Phil Ryan said while the result was disappointing, the company was determined to not overpay for Catherines.
“We have a focused strategy to grow our global digital presence and will execute this strategy through our extensive organic growth program and evaluating any inorganic opportunities on their merits,” he said in the statement to the ASX.
“Given current market conditions, we continue to see opportunities to add brands to our collective and more aggressively take market share organically.”Set featured image
Perhaps the improvement in the share price reflected the caution of the company in not wasting the $80 million which is $10% of the company’s $800 million-plus cap and a nice pot of money to have in reserve in the current difficult retail environment.