A CEO is the ultimate “inside man” of a company, no one knows the business better than they do. However, when they have started to sell a huge chunk of their shares every few months, is there a clearer telltale sign that the company has fallen from grace?
Luxury goods retailer Cettire (ASX: CTT) confirmed that its Founder and CEO Dean Mintz has sold down 10.8% of his shares in the Company, worth approximately $41 million. The sale was undertaken at a price of $1.46 per share by way of an underwritten block trade. Following this sale, Mintz will remain Cettire’s largest shareholder with 45.9% of shares, and has agreed to escrow his remaining holding in Cettire until the release of the Company’s half year results in February 2023. While the $41m is still a huge windfall for Mintz, those same shares were valued at $168m in November 2021.
Mintz said: “Cettire is in a very strong position with excellent momentum as demonstrated in the Company’s trading update provided at the AGM yesterday. The share sale represents a relatively small portion of my shareholding in the Company and enables me greater diversification, whilst increasing the free float and scope for Cettire shares to achieve inclusion in major indices over time.”
Mintz has been gradually downsizing his ownership of Cettire, which he founded. Back in March 2022, he also cashed out $47.25 million of his shares that represents 9.18% of all issued CTT shares, resulting in a price drop of Cettire shares by 13%. Following the latest sell down announcement on 18 November, Cettire shares fell by 12.8% on open from $1.70 to $1.48 per share, showing a striking resemblance on how history has repeated itself.
Cettire incurred a drastic loss of $19m in FY22 compared to a $251k net loss in FY21. This was somewhat expected as the online retailing industry has declined in the past year. For Cettire, this was due to factors such as higher fulfillment cost, less consumer spending, and investment-driven operating loss. Cettire’s business nature also makes it even harder to push sales as the demands for luxury consumer goods are getting less. Reduction in disposable income due to inflation, increase in interest rates, and border re-openings made people reluctant to buy high ticket items or would rather use the money to travel.
Cettire, however, is expecting a comeback in FY23. Cettire reported 72% sales growth compared to the previous corresponding period (pcp), from $38.6m in Q1 FY22 to $66.1m in Q1 FY23. This is a promising result to begin the financial year with, considering that Q1 is usually a low season in business according to Cettire.
In Q2, Cettire is planning to amp up their marketing strategy by focusing on customer retention, as pushing sales to existing customers is considered cheaper than the cost to acquire new customers. The Company has also confirmed it has commenced deployment of multi-language features via the release of a Chinese language site, primarily to target the Chinese market who spent almost US$73.6 billion on luxury goods at home in 2021.
Though Cettire is set to have a smooth sail in FY23 so far, is there something that only Mintz knows, that made him slowly disembark from Cettire’s upcoming “journey”?
Clara is a Business Reporter for The Sentiment.
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