Softer trading conditions proved detrimental for online luxury goods retailer Cettire (ASX: CTT), impacting its financial performance in the quarter. To combat the decline, the Company has expanded its base, officially launching its direct platform in mainland China which went live yesterday and has already processed orders.
This marks a big step in its strategic expansion into the world’s largest luxury market, especially amid softened trading conditions closer to home.
Cettire’s Founder and CEO, Dean Mintz, said, “As the world’s largest luxury market, China is an important strategic opportunity for Cettire. 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 [a] presence.”
Cettire has continued to experience revenue growth during Q4 FY24, driving increased penetration and market share in the online global personal luxury goods market. For FY24, the Company expects to deliver year-on-year growth in active customers, sales revenue, Adjusted EBITDA and cash.
It noted an FY24 sales revenue guidance of $735 to 745 million and adjusted EBITDA to be in the range of $32 to 35 million.
Mintz added, “With FY24 nearing completion, we are expecting to report considerable growth in revenue and Adjusted EBITDA for the year. Not only does this highlight the strong traction that our platform is gaining both on the supply and demand side, but it also illustrates our efficient cost structure. We are incredibly pleased with these results –including our strengthened position in the global luxury marketplace – all of which have been achieved organically.”
Cettire is a global online retailer offering a large selection of personal luxury goods. Since its business updates were implemented in mid-March, the Company has observed stable conversion rates in the US. Further, during Q4 FY24, US sales of high-value items have outpaced lower-value items. Moreover, its gross revenue contribution from repeat customers has increased through the course of the financial year.
Still, during the last several weeks, as Spring Summer 24 has entered the promotion period, the operating environment within global online luxury has become more challenging. Multiple listed luxury businesses have talked about softening demand trends and increased promotional activity (over and above the typical seasonal promotions), which has created a tougher margin environment. These developments have also impacted Cettire’s financial performance during Q4 FY24 to date. Additionally, the market is currently being impacted by clearance activity as certain players exit parts of it.
In March 2024, the Australian Financial Review called out Cettire for inaccuracies in its custom tax. It questioned whether the company was paying the right duties when it imported products into Australia, with customers paying more for duties than the retailer.
Despite a recent softening of market conditions, the overall opportunity in online luxury remains compelling, per Cettire. The Company is set to capitalise on this opportunity 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 and is cash-generative. Cettire has access to extensive inventory and remains focused on maximising profitable revenue growth while also self-funding.
Alinda is a Business Reporter for The Sentiment
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