Revenue up; profit down for luxury retailer Cettire as it eyes global expansion

Since February 2022, online luxury retailer Cettire (ASX: CTT) has seen its share price plummet from $2.13 to only $0.88 as of August 30. However, a baffling discrepancy followed as the Company released its financial report, announcing a gross revenue growth of 131% to $287.8 million. All this while, profit fell about 7.5% to $19.06 million.

The Company’s sales revenue is up 127% to $209.9 million. Moreover, while the active customer count has increased 127% to 260,249, 50% of gross revenue is coming from repeat customers; in FY21, it was just 40%. The delivered margin is up 70% to $37.4 million.

The Company is witnessing continued positive trading momentum with July sales revenue up  67% and August also up 67% as of the 26th. 

Cettire’s Founder & CEO, Dean Mintz, summed up, “In FY22, Cettire continued its rapid scaling. Sales revenues have increased almost 10x in the last 2 years as our proposition has gained traction and we have invested to capture the global market opportunity. We finished the FY22 year with much stronger foundations than the beginning of the period.”

The Company now owns its technology stack across the end-to-end customer journey as it migrated all its traffic to its proprietary storefront software. This move will allow significant incremental functionality and flexibility to support Cettire’s global expansion strategy. The Company also plans on employing this tech to grow its penetration outside its top three established markets (US, UK and Australia). Cettire also launched its mobile apps to improve user experience and boost customer retention.

Cettire is also trying to tap into its increased repeat customer count by encouraging spending and growing its platform globally. Mintz added that paid acquisition and brand investment also remained elevated during the second half to support the launch of the proprietary storefront. Cettire experienced higher return rates and higher fulfilment costs in H2, which impacted delivered margins. “Through the course of H2, the Company proactively moderated the pace of growth and marketing investment and recalibrated operating settings to improve underlying unit economics and marketing efficiency,” he said.

In light of falling profits, Cettire will focus on maximising profit revenue growth in the coming year. It will also expand into newer regions, like Mainland China, and ventures like the beauty category. However, with the increased near-term focus on platform optimisation, the Company made the decision to extend the timeframe for launch to during FY23.

For FY23, Cettire will focus on profitable growth, targeting becoming EBITDA positive in FY23. It will also continue to fund itself in the coming year, but seeing how that went for the Company in March of this year, with the founder having to cash out $47 million, there is no telling how viable that strategy will be.