Luxury platform Cettire has reported a further softening in its profit margin for the third quarter of FY25 amid flattening revenue and a heavy promotional environment.
The Australian-born global e-tailer delivered a margin of 14 per cent, down from a margin of more than 20 per cent in the same quarter of FY24. In the first half of FY25, Cettire’s margin was 18 per cent.
The drop in margin comes as Cettire's sales revenue flattened in the third quarter, lifting just one per cent compared to double-digit booms in prior periods. Third quarter sales hit $192.5 million, up by around $1.5 million.
The one per cent lift in the latest quarter follows an 11 per cent lift in sales revenue for the first half of FY25, and an 88 per cent lift in sales for the third quarter of FY24.
Cettire founder and CEO Dean Mintz said the operating environment within the global personal luxury goods market since the first half has remained volatile, noting softening underlying demand evident across all geographies.
“Following a profitable first half, Cettire placed an increased emphasis on market share in the third quarter,” Mintz said.
“While revenue growth was not maintained at H1 FY25 levels, Cettire’s growth is likely to outperform the luxury sector, with recent industry results and guidance demonstrating negative growth across a number of brands in the March quarter.”
Mintz confirmed that Cettire continued to participate in promotional activity through the third quarter, driven by its plan to increase market share and against a sector-wide backdrop of persistent promotions to stimulate demand.
“At the same time, Cettire moderately increased its investment in marketing compared with the first half, with marketing costs as a percentage of sales of above 8 per cent.”
Meanwhile, the platform’s adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) was in negative territory at minus $4.7 million, inclusive of $2.1 million realised foreign exchange loss.
The company’s average order value also suffered in the third quarter, down $3 to $829. However, its active customer base has lifted 8 per cent to 695,738, with gross revenue from repeat customers up 6 percentage points to 68 per cent.
Noting the foreign exchange loss, Mintz said this was most notable in EUR to USD. He is expecting this volatility to continue and has increased near-term currency hedging. Mintz noted that the Cettire’s net cash was down $14 million to $76 million.
Cettire also updated investors on the effects from the US and China tariff war, reporting a general softening in demand in the North American market – Cettire’s largest market.
This includes sales of items that are not subject to duties, according to the luxury platform.
“Beyond these more generalised impacts, there will potentially be a more direct impact, albeit to a lesser extent, from new tariffs on the sale of China-manufactured items into the US, which represented 3.8 per cent of Cettire’s total gross sales in Q3 FY25,” the company reported.
Cettire added it will continue to focus on further geographic diversification of its revenue base, underpinned by its localisation strategy.
“While Cettire’s increased emphasis on market share in Q3 FY25 achieved some benefits, including customer additions, returns on growth investment have been below expectations due to the challenging and volatile external environment,” Cettire reported.
“In light of this environment, the company has implemented a series of cost initiatives during Q3 FY25 to drive run rate improvements in variable costs, across fulfilment, merchant fees and IT, totalling more than $5.0 million per annum at current volumes.
“Cettire remains relentlessly focused on its strategy to grow profitably while self-funding. Due to the rapidly evolving market environment, the immediate focus is on delivering Q4 profitability.”
Cettire refused to share further commentary on fourth quarter performance expectations.