• City Chic’s stock surge shines spotlight on sustainable fashion
  • The company has made strides in sustainable fashion by integrating eco-friendly materials
  • Australia is moving towards more ethical fashion practices 

 

Global women fashion retailer, City Chic Collective (ASX:CCX), stunned the market with a 60% surge on Wednesday after reporting its full-year financial results.

Despite reporting an EBITDA loss, CCX cut the loss by 47.3% from the previous year, bringing it down to $8.4 million.

Investors were also impressed by the company’s inventory management which saw inventory reduced by 42.8% to $30.7 million, signalling a significant step toward more efficient operations.

They also responded positively to the company’s strategic shift, which included divesting the Avenue and Evans brands and focusing on the core City Chic brand across Australia, New Zealand, and the US.

City Chic’s rapid turnaround has not only highlighted the company’s huge improvements, but also brought attention to its sustainability efforts, raising questions about the fashion industry’s viability for ethical investors.

 

How sustainable is City Chic’s operations?

In its ESG statement, City Chic acknowledges the importance of the materials it uses and their impact on sustainability.

The company said it has explored more sustainable options and has taken initial steps by introducing “better” choice fibres into a small portion of its product lines.

These fibres include organic cotton, Supima cotton, FSC-approved viscose, FSC-approved bamboo, and recycled polyester.

“FSC-approved” refers to materials that have been certified by the Forest Stewardship Council (FSC).

The FSC is an international organisation that sets standards for responsible forest management and ensures that products come from forests that are managed sustainably.

FSC-approved Viscose, also called rayon, is a fabric made from wood pulp. When it’s FSC-approved, it means the wood comes from forests that are managed in a responsible way.

Bamboo fabric is another material that can be FSC-certified, ensuring that the bamboo used comes from sustainably managed sources.

Supima cotton (a blend of “Superior” and “Pima”) is also considered sustainable for several reasons.

First, the material is high-quality and durable, meaning garments last longer and reduce the need for frequent replacements. It is grown with less water compared to other cotton types and requires fewer chemicals for dyeing, minimising environmental impact.

Additionally, Supima cotton is often produced under strict environmental and ethical standards in countries like the US .

City Chic also said it’s been collaborating with its distribution partners to create packaging made from high-recycled plastics.

In Australia and the UK, its distribution centres have already transitioned to using satchels made from at least 65% recycled materials, while its US centres will start using these satchels soon.

Additionally, the company said it was committed to the Extended Producer Responsibility (EPR) schemes in the UK, Germany, and France.

The EPR aims to ease the burden of plastic waste management by holding producers accountable for their packaging throughout its lifecycle.

 

Challenges in sustainable fashion

When it comes to “sustainable fashion,” there are many definitions, but fundamentally, it aims to reduce the environmental impact of clothing production and waste.

The industry faces significant challenges, including the massive water usage and pollution associated with fabric production, as well as the high levels of carbon emissions it generates.

For example, the global fashion industry uses about 215 trillion litres of water each year, and is responsible for up to 10% of global carbon emissions.

Also, with production nearly doubling from 2000 to 2023, and clothes being discarded much faster, around 85% of garments end up in landfills, while only 1% are recycled into new clothes.

Efforts to improve sustainability include using organic materials like cotton, bamboo, and hemp, which avoid harmful pesticides and fertilisers, and implementing recycled materials.

While recycled fibres are gaining traction, the technology to effectively recycle mixed fabrics is still developing.

New alternatives like mushroom-based leathers and textiles made from waste materials offer promising solutions, but many are still in the experimental phase.

 

Australia adopts ‘conscious fashion’

In March, France’s lower house of parliament unanimously supported a crackdown on ultra-fast fashion, targeting major companies like Shein and Temu.

The new bill aims to ban advertisements for ultra-fast fashion and impose fines of up to 10 euros per item to address the environmental damage caused by this industry.

While Australia hasn’t proposed a ban on ultra-fast fashion, there’s growing pressure on brands to prove their ethical production practices. We face our own challenges with 200,000 tonnes of clothing ending up in landfills annually.

The good news is Australia’s fashion industry is increasingly adopting what’s called ‘conscious fashion’, which is seen as the antithesis to ultra-fast fashion.

“Conscious fashion is a philosophy that considers all the inputs that go into making our clothes – natural, animal and human – and what harm the manufacturing process may cause,” said Marie Kinsella, CEO of the International Expo Group.

“It prioritises the sustainability of people and planet as much as the bottom line.”

A survey conducted by Monash Business School in 2023 found that over half of Australians (51%) consider sustainability to be a key factor in their retail purchases.

“Concurrently, regulators are introducing comprehensive transparency and supply chain due diligence laws, resulting in a new era of corporate accountability that brands will need to adhere to,” said Kinsella.

 

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