'Unrelenting focus': Why this ASX All Ords share is primed for market dominance

This pick could be a luxury investment on the stock market.

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Key points

  • Cettire is a retailer of luxury goods from thousands of brands
  • Revenue has soared in 2023, which is one of the factors that has attracted LHC Capital
  • The ASX All Ords share’s profitability is increasing as it grows

One fund manager has backed Cettire Ltd (ASX: CTT) as an ASX All Ordinaries (ASX: XAO), or All Ords, share that is on an appealing path to success.

If you haven't heard of Cettire before, that's understandable. The company describes itself as a global luxury goods platform carrying 2,500 brands and 400,000 products, selling to 53 geographic markets.

The company has grown sales revenue from $0.5 million in FY18 to $187.7 million in the first half of FY23.

Strong FY23 performance by the ASX All Ords share

Fund manager LHC Capital is highly positive on Cettire shares, according to reporting by the Australian Financial Review.

LHC Capital's Marcus Hughes and Stephen Aboud were pleased by Cettire's recent update which highlighted "the rapid and profitable global success the business is enjoying".

In mid-May, Cettire shared its performance for the period ending 30 April 2023.

In the four months to April 2023, sales revenue increased by 122% to $141.3 million. April 2023's monthly sales were up 160% and Cettire said it expected to maintain monthly growth rates "of at least this level through the balance of FY23".

It also made adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) of at least $7 million for those four months, which came with a delivered margin of more than 20%.

In FY23 to April, a ten-month period, its adjusted EBITDA was at least $23.7 million, generated from sales revenue of $329 million.

It also finished April 2023 with net cash of $39 million.

The ASX All Ords share reported the amount of revenue that's coming from repeat customers is increasing. In the FY22 third quarter, 51% of its gross revenue was from repeat customers, and that had grown to 59% in the third quarter of FY23.

With an overall update like that, it's no wonder the Cettire share price has gone up 60% over the past six months.

Positive outlook for the Cettire share price

Outlining its positive case for the business, LHC Capital said:

We believe that the global luxury industry is enormous, the online segment of global luxury is structurally under-penetrated and that Cettire is uniquely positioned to join Farfetch in a global luxury marketplace duopoly.

We are also particularly attracted to Cettire's founder-manager leadership, an unrelenting focus on using software automation to eliminate human labour and build scale, and its ability to self-fund its profitable growth profile.

It is rare for businesses achieving such growth rates spread across so many geographies to execute perfectly, and so we will be positioned to benefit should Cettire flawlessly execute, but also to take advantage of any temporary speed bumps that may cause surprise.

The AFR reported that LHC believes Cettire is making between $2 million to $3 million of EBITDA per month.

Cettire share price snapshot

Over the past year, Cettire shares have risen by 570%. It will be interesting to see what happens next with the ASX All Ords share.

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Cettire. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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