Shares in Cettire, an online luxury products retailer, plunged more than 40% in early trading to a low of A$1.29 following a warning of tough trading conditions.
The company reported that its fourth-quarter had been significantly impacted by challenging global luxury market conditions, leading to an anticipated small profit at best for the three months ending June 30.
In a market update this morning, Cettire forecasted an adjusted EBITDA (earnings before interest, taxes, depreciation and amortisation) for the full 2024 financial year to be in the range of A$32-35 million, with expected full-year sales revenue between A$735-745 million.
Previously, Cettire had reported a year-to-date FY24 adjusted EBITDA of A$32.1 million on sales revenue of A$545.2 million for the first nine months.
Cettire CEO Dean Mintz, a member of Australia's Richest 250, attributed the downturn to a softening demand environment and increased promotional activity, particularly during the spring-summer FY24 sale period.
Mintz also said market clearance activities by certain players exiting the market were impacting current conditions. Despite these challenges, Cettire has expanded its platform to mainland China.
Cettire’s business model and supply network have been scrutinised recently, while the competition regulator is probing complaints about the company's customer service and dispute handling over refunds and defective goods.
A UBS note to clients highlighted that Cettire's earnings miss is the first significant one since the COVID-19 pandemic. UBS executive director Sujit Dey noted, “Any miss would get punished because it could indicate that CTT is trying to ‘fix’ some of the issues that have been raised by the press and blogs.”
RBC Capital Markets analyst Wei-Weng Chen also expressed concern over the low end of Cettire's EBITDA guidance, implying a potential loss in the fourth quarter. Chen stated, “Given CTT’s lean operations (circa 70 staff), we see limited recourse for self-help should challenging operating conditions persist.”
The luxury goods market has seen significant upheaval, with Cettire’s rival Farfetch being acquired in a rescue deal by South Korean group Coupang and Matchesfashion collapsing owing over £210 million. Since January 1, Cettire shares have declined more than 53%.