The Cettire Ltd (ASX: CTT) share price has fallen hard since the start of the year. It's down 28%. Does this mean that the business is now a compelling idea?
It has fallen even further if we look further back. Since the middle of November it has actually dropped by 45%.
The (ASX) share market can be volatile as a whole. Individual shares can move dramatically in the space of a few weeks or even just a few days.
But, regardless of what's going on with the Cettire share price, it is continuing to report fast growth and also expanding its product offering.
HY22's triple-digit growth
The luxury product retailer announced a FY22 first half set of numbers that saw the company's top line grow rapidly.
It said that sales revenue jumped 181% to $113.7 million and the product margin soared 178% to $42.7 million and the delivered margin increased by 118% to $24.7 million. Statutory net profit after tax was a loss of $8.3 million, down from a loss of $2.3 million. The business is investing heavily for growth. Active customers rose 208% to 209,000.
The company also pointed out that its profit margins improved in the first half of FY22 compared to the second half of FY21, with the delivered margin rising from 20.5% to 21.7%.
Cettire's operating cash flow grew by 43% to $12.3 million despite all of the spending on marketing and so on that it's doing.
Revenue growth accelerated in January 2021, with gross revenue growth of 242%.
Further growth initiatives
Around 80% of Cettire's web traffic accessing the site comes through mobile internet. So the coming launch of the company's mobile apps provides scope to improve and optimise the transaction flow and support improved conversion rates over time.
The business is launching into the luxury beauty category, which will expand the company's total addressable market and is a "key step in propelling Cettire towards its ambition of being the world's leading online luxury destination." The Cettire share price may continue to be influenced by the company's ability to capture more of the global beauty market.
Chinese expansion
The latest move by the company is to enter the mainland luxury China market.
Why China? It's expected to be the world's largest market for personal luxury goods by 2025, representing around 25% of the A$600 billion global market. Cettire pointed out this is a $150 billion total addressable market. China is a key priority for the company's expansion.
Management are expecting that Cettire will be available to Chinese consumers in the second half of the 2022 calendar year.
As part of the market entry, it has entered into a partnership with JD.com a leading Chinese e-commerce platform that has over 550 million active customers and is China's largest online retail platform. This had an initial positive reaction from the Cettire share price.
Chinese customers will have access to Cettire's extensive luxury selection and post-sales support. JD.com will help to drive traffic, brand awareness and accelerate Cettire's growth.
Cettire is also developing a local talent pool in mainland China, commencing with the first of a number of senior technology hires late in 2021. It's intended that the local Chinese team will help develop features specific to the mainland Chinese market, including Chinese language websites.
