Cettire Ltd (ASX: CTT) shares are recovering in afternoon trade following a sharp selloff this morning.
At the time of writing, the online luxury product retailer's shares are down 13% to $4.06.
This is a big improvement on its earlier decline of 27% to $3.41.
In fact, if you had bought at the bottom on Wednesday, you'd now be up a sizeable 19% in less than five hours.
Why are Cettire shares recovering?
Investors were hitting the sell button today amid concerns over a report in the Australian Financial Review.
That report claimed that the media outlet was charged duties of $169.43 but that these duties were not handed over to Australian customs officials.
This sparked concerns over Cettire's business practices and called into question its impressive sales and profit growth.
Cettire response
This afternoon, the company responded to the media report and refuted its claims.
While Cettire acknowledges that it charges estimated duties on orders, it highlights that any benefit from these charges is negligible. Particularly given that sometimes its estimates are short of the mark and its bears the additional costs. It said:
Cettire accounts for revenue for any estimated duties or import fees charged to customers as well as a corresponding cost for the duties and import fees paid, in accordance with accounting standards. On balance, the Company believes that neither duty revenues, nor duty expenses nor the net P&L impact are material.
Furthermore, in direct response to the media report, the company highlights that the AFR was erroneously using DHL internal terminology to judge whether duties were paid. It explains:
The article in question referenced a shipping label from DHL and highlighted the language "Duties & Taxes Unpaid". This language on the DHL shipping label bears no relation whatsoever to whether or not duties were applicable to the shipment, nor whether duties were actually paid.
Rather, it refers to a service provided by DHL whereby it facilitates the payment of duty on behalf of its customer (Cettire). In this specific example, Duties & Taxes Unpaid simply means that that service was not provided by DHL on the relevant shipment. It does not mean that there is any outstanding duty payable by the customer or by Cettire in relation to the shipment.
Cettire shares are up approximately 140% over the last 12 months.
