Luxury marketplace Cettire looks to China as first-half sales soar

Investors piled into the online retailer, pushing the shares up by as much as 34.7 per cent in early trade, some of which was due to short covering. The stock finished the day 25 per cent higher at $3.97, the highest close in more than two years.

The surge pushed Mr Mintz’s personal stake in Cettire of 37.2 per cent to roughly $563 million. He has already pocketed more than $200 million by selling down his shareholding in various parcels. Speculation mounted that he could push the button on another share sale following the pop in the share price.

Cettire said the high-end consumer was proving resilient and demand for designer products remained healthy, countering the challenging macroeconomic backdrop.

Mr Mintz, who only took written questions from analysts and declined requests for interviews, flagged a strong start to the second half based on January trading, when gross sales were up 80 per cent. Cettire is exploring capital management initiatives, given its $100 million cash position and zero debt.

“Everything is in place to grow strongly for the rest of this financial year,” he said.

Cettire, which was founded in 2017, operates in the grey market, selling products from thousands of suppliers and acting as the intermediary between brands and customers. It holds no stock in its own right.

The company said on Wednesday that strong half-year sales growth was driven primarily by the increase to 575,888 active customers (those who have purchased in the past 12 months), up from 313,982 a year ago. The average order value was almost $800.

At the same time, Cettire increased its customer acquisition expense to 8.9 per cent of sales, from 7.9 per cent a year ago. Chief financial officer Tim Hume said the increase in marketing reflected a deliberate move to market more aggressively.

He told investors that the ballooning receivables figure at the last result was fully unwound and converted to cash.

Adjusted EBITDA rose 56 per cent to $26.1 million in the half. Gross profit increased to $82.2 million, from $47 million, and interim net profit was $12.8 million, up 60 per cent. Cettire does not pay a dividend.

Unique model

Mr Mintz said Cettire delivered an exceptional result, with broad-based momentum across established and emerging markets, supported by local strategies.

“I believe this is our strongest trading half since Cettire went public several years ago, and further demonstrates the uniqueness of our business model, the benefits of our proprietary technology platform, and the strength of our execution,” he said.

Cettire has been focused on localising the platform in emerging markets, including multi-language and domestic payment options. Cettire’s software is integrated with that of its suppliers, providing real-time visibility on more than $2 billion of inventory. Algorithms determine the fastest fulfilment, proximity to customer, and margin.

The China luxury market is tipped to grow at a mid-single-digit pace this year, but is still not back at 2021 levels, according to consultants Bain & Co.

China’s luxury market grew by 12 per cent last year.

The grey market for luxury goods – worth about $US20 billion ($30.6 billion) – is not an authorised distribution channel, with many fashion houses opting not to participate. But it remains an important way to sell slow-moving stock at a discount.

The troubles of larger rival, Farfetch, which was just sold to a Korean buyer after facing bankruptcy, have been to Cettire’s advantage. But Mr Mintz aimed to downplay any wins, saying there has been strong support from third-party suppliers for some time.

E&P Financial Group said in a January report that Cettire had reached critical mass in the first half of 2023, as the business turned profitable and cash flow positive. Last financial year, it doubled its sales to a record $416 million.

“The business is highly scalable because the core workflows are essentially automated, and it runs with negative working capital,” the broker said.