Revenue Downgrade: Here's What Analysts Forecast For City Chic Collective Limited (ASX:CCX)

Today is shaping up negative for City Chic Collective Limited (ASX:CCX) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. Revenue estimates were cut sharply as analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well. Surprisingly the share price has been buoyant, rising 23% to AU$0.37 in the past 7 days. Whether the downgrade will have a negative impact on demand for shares is yet to be seen.

Following the latest downgrade, the current consensus, from the eight analysts covering City Chic Collective, is for revenues of AU$222m in 2024, which would reflect a definite 18% reduction in City Chic Collective's sales over the past 12 months. Losses are predicted to fall substantially, shrinking 61% to AU$0.074 per share. Yet before this consensus update, the analysts had been forecasting revenues of AU$246m and losses of AU$0.071 per share in 2024. So there's been quite a change-up of views after the recent consensus updates, with the analysts making a serious cut to their revenue forecasts while also expecting losses per share to increase.

See our latest analysis for City Chic Collective

The consensus price target fell 7.0% to AU$0.52, with the analysts clearly concerned about the company following the weaker revenue and earnings outlook.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. We would highlight that sales are expected to reverse, with a forecast 18% annualised revenue decline to the end of 2024. That is a notable change from historical growth of 22% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 6.2% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - City Chic Collective is expected to lag the wider industry.

The Bottom Line

The most important thing to note from this downgrade is that the consensus increased its forecast losses this year, suggesting all may not be well at City Chic Collective. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that City Chic Collective's revenues are expected to grow slower than the wider market. The consensus price target fell measurably, with analysts seemingly not reassured by recent business developments, leading to a lower estimate of City Chic Collective's future valuation. Overall, given the drastic downgrade to this year's forecasts, we'd be feeling a little more wary of City Chic Collective going forwards.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple City Chic Collective analysts - going out to 2026, and you can see them free on our platform here.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.