Luxury online platform Cettire has been hit with a 49 per cent fall in its share price today, hitting a low of $1.12 from $2.24 recorded last Friday at 4pm. The share price has since lifted to $1.16 as of writing.
The fall comes amid lower-than-expected earnings, with Cettire reporting to the market that it will achieve a full-year sales lift between 77 per cent and 79 per cent compared to last year - to $735 million and $745 million.
Alongside the sales lift, Cettire’s earnings before interest, tax, depreciation and amortisation (EBITDA) is expected to hit somewhere between $32 million and $35 million, up 24-36 per cent.
According to media reports, these projections are below expectations tabled by analysts.
“We are incredibly pleased with these results – including our strengthened position in the global luxury marketplace – all of which have been achieved organically,” founder and CEO Dean Mintz said.
“The company’s updated checkout also continues to perform strongly. We have observed stable conversion rates in the US since the updates were implemented in mid-March.
“Further, during Q4-FY24, US sales of high-value items have outpaced lower-value items.
“Overall customer retention continues to improve, with the proportion of gross sales from repeat customers in Q4-FY24 to date increasing versus Q3, demonstrating that Cettire’s proposition continues to resonate with customers.”
However, despite the surge, Mintz reported a softening demand environment and an increase in promotional activity across its footprint, particularly in the last several weeks.
“Additionally, we believe the market is currently being impacted by clearance activity as certain players exit parts of the market,” Mintz said.
“To continue to expand our market share, Cettire has selectively participated in the promotional activity, leading to an increase in marketing costs relative to sales and a decline in delivered margin percentage.”
Mintz said despite a recent softening of market conditions, the overall opportunity in online luxury remains compelling, supported by industry consolidation.
“Cettire is well positioned to capitalise on the opportunity in online luxury given the resilience and flexibility of its business, which is underpinned by a large and diverse supply chain, geographic diversity and a capital-light model with minimal inventory risk.
“The company continues to grow rapidly, is profitable and cash generative. Cettire has access to extensive inventory levels and remains focused on maximising profitable revenue growth, whilst also self-funding.”
The latest trading update comes as the luxury business launched a direct website in mainland China on Sunday, June 23, which is already processing orders.
“As the world’s largest luxury market, China is an important strategic opportunity for Cettire,” Mintz said. “The launch of our direct platform represents the culmination of considerable preparation and development from our dedicated team and our partners.
“We intend to be measured in our approach to the market, with a broadening of our channel proposition over time as we seek to build presence.”