Australian luxury fashion platform Cettire has recorded a fall in its profit margin for the first quarter of FY25 compared to the same time last year, despite another double-digit surge in sales revenue.
The delivered margin of 17 per cent recorded in the latest quarter is down by around 3 percentage points on last year, with Cettire citing continued heightened promotional activity, particularly in July and August.
The company’s adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) was $2 million, representing an improvement of $1.6 million on Q4 FY24, but is down from $8.7 million recorded the same time last year.
In the same timeframe, the luxury platform recorded a 22 per cent lift in sales revenue to $155 million, with gross revenue up 18 per cent to $198 million. The average order value grew by 6 per cent to $777, with active customers up 43 per cent to 698,066.
Gross revenue from repeat customers lifted to 67 per cent from 59 per cent in the last quarter.
Cettire founder Dean Mintz said the key focus over the quarter was navigating softer trading conditions and continued heightened promotional activity in the global luxury sector “by optimising operating settings to reflect our increased emphasis on profitability.”
“Improvements to both delivered margin and adjusted EBITDA were realised towards the end of the quarter as the benefits of our strategy materialised,” Mintz said. “Sales revenue growth of 22 per cent represents continued growth in market share, notwithstanding a progressive reduction in marketing investment, which represented around 8 per cent of sales revenue in the period.
“Customer lifetime value metrics improved year-on-year, with higher AOV and repeat customers contributing 67 per cent of gross revenues, while the US was our fastest growing established market.
“By adjusting our operating settings throughout July and August, we successfully offset some of the external industry pressures, enabling Cettire to exit the quarter with enhanced profitability in September, while still achieving underlying growth in an otherwise challenging global luxury demand environment.”
According to Mintz, not only does this demonstrate the company’s ability to generate and protect through-the-cycle profits, it also positions Cettire well heading into peak season trade.
“The company’s net cash balance was approximately $66 million at period end (Q1 FY24: $59 million),” Mintz confirmed. “Our business model, which benefits from low fixed costs, minimal inventory risk and a large and growing supply chain, provides us with significant flexibility to deliver relative sales growth and profit outperformance within the online luxury sector, further underlining our differentiated investment value proposition.
“As a result of our increased emphasis on profitability, we have continued to invest cautiously, with marketing costs reducing as a percentage of sales revenue during October.
“Notwithstanding the proportional reduction in marketing spend and the fact that we are cycling a very strong comparator FY24 period, in the first half of October we were able to achieve around 5 per cent revenue growth.
“Looking forward, we are confident underlying demand for luxury will remain resilient and will ultimately improve in the next 6-12 months.
“The luxury sector’s growing total addressable market and our differentiated business model provides Cettire with significant runway to deliver on its strategy to drive profitable growth and continue to scale its platform globally.”