Why the Cettire (ASX:CTT) share price is crashing despite 192% revenue growth

It hasn’t been a good day for Cettire shares…

| More on:
Young man looking afraid representing ASX shares investor scared of market crash

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Key points

  • Investors have been selling off Cettire shares following its half year results
  • Cettire almost tripled its revenue during the first half
  • But this growth came at a significant cost and the market is reacting

The Cettire Ltd (ASX: CTT) share price is crashing on Thursday following the release of its half year results.

At the time of writing, the global luxury online retailer’s shares are down 14% to $2.60.

Cettire delivers explosive growth during the first half

  • Gross revenue up 192% to $154.1 million
  • Active customers up 208% to 209,000
  • Product margin up 178% to $42.7 million
  • Operating loss of $9.9 million compared to EBITDA of $4.8 million
  • Net loss after tax of $8.3 million compared to a profit of $2.3 million
  • Operating cashflow up 43% to $12.3 million
  • Cash balance of $55.5 million at the end of December

What happened during the first half?

For the six months ended 31 December, Cettire delivered a 192% increase in gross revenue to $154.1 million. This was also more than the revenue of $124.5 million that the company generated during the entirety of FY 2021.

Management advised that this was driven by a 208% jump in active customers to 209,000, offset slightly by an 8% reduction in average order value to $712.

One big disappointment, which could be weighing heavily on the Cettire share price today, was that this stellar revenue growth did not translate into profit growth. In fact, the company posted a net loss after tax of $8.3 million, which compares to a profit of $2.3 million a year earlier.

This was because Cettire’s sales and customer growth was underpinned by a significant increase in advertising and marketing costs. For the six months, Cettire spent $25.9 million on these activities, which is up approximately 550% from just ~$3.9 million in the prior corresponding period. In addition, a 200% increase in merchant fees also weighed on its margins.

Management commentary

Cettire’s Founder, CEO, and Executive Director, Dean Mintz, appeared to be very pleased with the half.

He said: “A lot of the themes from our FY21 results continued in the first half of FY22. Cettire again grew very rapidly, substantially increasing unique visitors and active customers, further increasing the proportion of revenues from repeat customers, and overall continuing its growth trajectory.”

“The financial results delivered over the first half of FY22 demonstrate the substantial progress we’ve made in executing our growth strategy. A number of important enhancements were implemented to our consumer proposition including further localisation, enabled by our proprietary e-commerce storefront solution, and investing in our brand. What excites us is that Cettire has only just started and is in the early stages of its growth journey. The runway ahead is vast and we will continue to invest to capture the significant market opportunity we see for the business,” Mintz added.


The good news for shareholders is that Cettire has started the second half how it finished the first.

As of the end of January, the company’s unaudited gross revenue was up 242% on the prior corresponding period. However, no details were provided in respect to its profits for the period, though management hinted that its increased spend on marketing has continued.

Mr Mintz commented: “Our growth trajectory has continued into H2 FY22, where we have experienced a further acceleration in our growth rate in January. Given the global growth opportunity available to Cettire, we will be running the business to maximise revenues by further investing in brand and customer acquisition, to drive long-term shareholder value.”

“Our focus for the remainder of FY22 is to continue to enhance our customer proposition which is centred around our vast selection of luxury products, value and rapid fulfilment, whilst continuing to develop our deep and diverse supply relationships and investing in our world-class proprietary e-commerce technology that can be rapidly scaled to support entry to new product and geographic markets,” he concluded.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns and has recommended Cettire Limited. The Motley Fool Australia has recommended Cettire Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Earnings Results

chicken, KFC, drumstick, fried food, junk food
Earnings Results

Collins Foods share price jumps 11% on FY22 results

This KFC restaurant operator had a strong year...

Read more »

Happy woman looking for groceries. as she watches the Coles share price and Woolworths share price on her phone
Consumer Staples & Discretionary Shares

Metcash share price storms 8% higher on FY 2022 earnings beat

Metcash had a strong 12 months...

Read more »

A young man with short black fuzzy hair and wearing a black and white striped t-shirt looks surprised at a broker's tip that Macquarie shares will rise by 30%
Earnings Results

Mesoblast share price spikes amid ‘substantial reduction in operational spend’

Mesoblast also completed the resubmission of its Biologics License Application (BLA) for remestemcel-L to the FDA last quarter.

Read more »

A doctor sits with a patient and uses a pen to point to certain parts of her mammogram scan
Earnings Results

Volpara share price up on record full-year results

ASX investors appear to be pleased with Volpara's results.

Read more »

Miner looking at his notes.
Earnings Results

Champion Iron share price falls on FY22 results

Champion Iron shares are under pressure on Thursday...

Read more »

Person with thumbs down and a red sad face poster covering the face.
Earnings Results

Here’s why the New Hope share price is tumbling 8% on Thursday

Coal prices have reached all-time highs amid Russia's war in Ukraine.

Read more »

a man sits at a bar leaning sadly on his basketball wearing a US flag sticker on his cheekbone near a half drunk beer and looking despondent as though his basketball team has just lost a game.
Earnings Results

Why is the Catapult share price tumbling 6% lower today?

Catapult shares are falling on Thursday following the release of its full-year results...

Read more »

Man with a sleep apnea mask on whilst sleeping.
Earnings Results

Fisher & Paykel share price exhales following ‘strong’ full-year results

The COVID-19 tailwind is beginning to taper off, but how did Fisher & Paykel perform in FY22?

Read more »