Cettire's first-half profit drops 63% on softening demand
Make us a preferred source
Make us a preferred source on Google
The news: Luxury retail platform Cettire has announced a first-half net profit of $4.7 million, 63% lower than the same period last year.
The smaller profit came despite revenue rising 11% to just shy of $394 million. The ecommerce company blamed smaller gross margins on "ongoing sector-wide discounting activity" with demand for luxury goods remaining soft.
The numbers: Gross product margin shrunk 5.2% on the previous period and came in 1% lower than market expectations.
US sales growth was largely flat, falling from around 66% last year to just 1% in the first half. Meanwhile Australian sales shrunk for the first time.
At the same time of lower profitability and tighter margins, Cettire said it continued to grow active customers by 21% year on year to 695,465.
Average order value increased 4% to $821 and gross revenue from repeat customers jumped by 67%.
What they said: Citi analysts said the results had largely missed expectations.
"The result confirms our view that downturn in the luxury market continues to impact Cettire’s performance. In addition, trade tension adds to the mix of headwinds for negative sentiment on the stock," they said in a note to clients.
The context: The ecommerce stock has sold off heavily over the last 12 months as it became targeted by short sellers and faced significant scrutiny over its treatment of duties and taxes. The share price has fallen 75% over the last year.
More recently, Trump's suggestion that he could remove the de minimis exemption on Europe, which allows deliveries below a certain value to avoid duties treatment, has spooked investors. With the majority of Cettire's goods travelling from Europe to the United States, the risk of paying higher fees would affect a substantial part of its business.
No update on this risk was provided in Cettire's first half results.
The source: ASX
