Fortune article CHICAGO, Ill.
— Chi-Ci Clothing Group Inc. (CIG) said Friday it expects to post a net loss of $1.3 billion for the fiscal year ending March 31, a significant drop from the $2.2 billion it earned in the previous year.
That compares with a net profit of $2 billion in fiscal 2015, and $2 million in fiscal 2016.
The company’s chief financial officer, Peter Lohse, said the company is now “on track” to deliver a net annual loss of between $100 million and $200 million, based on estimates of a net operating loss of up to $2-$3 billion.
“We are very focused on building a strong and sustainable business model that will help us grow and create opportunities for future growth,” Lohsel said.
The restructuring of the company’s clothing business, which includes the closure of stores in Chicago and San Francisco, was announced in February, after years of struggling to make profits.
The business lost $2-3 billion in the first half of this year, mostly in apparel sales.
But Lohss said the restructuring has been the catalyst for the company to see a 30% increase in its revenue this year compared to last year.
Chi-cis clothing is one of several major companies that have seen significant revenue declines in recent years, but Lohsse said the latest results were the first he’s seen to show the company had a long-term sustainable business plan.
“The plan has not changed, the plan has stayed the same, and we’re focused on creating a strong product that is great for the consumer,” Lich said.
Chi’s loss was the second-largest of any U.S. apparel company, trailing only Levi Strauss & Assurance Corp.’s $1-billion loss in March.
The clothing industry has seen several companies go bankrupt, including TJ Maxx, which shut its doors in 2015, Macy’s, which sold off all its U.K.-based stores in 2016, and Forever 21.
The Chi-Coat, which is a new line of clothing, will launch in October in stores in New York City, Los Angeles and Los Angeles County.
In March, Chi-Corp closed a factory in San Francisco that made clothing for the fashion industry and moved production to Mexico.
The shift to Mexico, which has a labor shortage, has been blamed for a sharp drop in Chi-Cor clothing sales.
It’s unclear whether the Chi-Can brand will continue to grow and compete with other brands that sell clothes at significantly lower prices.