Cettire Ltd (ASX: CTT) shares are having a day to forget on Thursday.
In morning trade, the online luxury products retailer's shares are down 27% to a multi-year low of 34 cents.
This latest decline means that its shares are now down 85% since this time last year.
Image source: Getty Images
Why are Cettire shares crashing?
Investors have been rushing to the exits in their droves this morning after the company released another bleak trading update.
According to the release, for the 11 months ended 31 May, sales revenue was up 1.7% over the prior corresponding period to $693.8 million.
However, as a comparison, during the first half of FY 2025, Cettire's sales revenue was up 11% to $394 million.
And with its sales growing 1% in the third quarter, this appears to indicate that the company's sales growth has turned very negative during the fourth quarter.
Also heading lower has been the company's active customers (those that have purchased in the last 12 months), which now stands at 671,328. This is down 3.5% since the end of March.
Earnings crunch
The release reveals that Cettire's delivered margin is 16% financial year to date, this is down from 18% during the first half. Management advised that this reflects a continuation of heightened promotional activity and higher fulfilment costs.
This ultimately means that adjusted EBITDA is $0.5 million financial year to date. This is inclusive of ~$2 million realised foreign exchange loss during April and May.
As a comparison, the company reported positive EBITDA of $12.1 million for the first half. And given that its EBITDA was negative $4.7 million during the third quarter, this suggests that Cettire has recorded a disappointing $6.9 million EBITDA loss for the first two months of the fourth quarter.
Management advised that it is now focused on delivering improved profitability through the remainder of FY 2025 and into FY 2026, while greater volatility in demand persists.
Cettire's CEO, Dean Mintz, said:
The operating environment within the global personal luxury goods market since Cettire's Q3 FY25 trading update has remained volatile, with a continued softening of demand in the Company's Established Markets, notably in the US. Recent results from luxury industry participants point to continued challenges in the sector, amplified by trade uncertainty surrounding US tariff policy.
As a result, elevated promotional activity persists across the market. Against this backdrop, Cettire's focus remains on geographic revenue diversification and improving delivered margin percentage.
Commenting on the future, Mintz adds:
The Company's Emerging Markets continue to demonstrate a significant opportunity and Cettire is evaluating a further expansion in its footprint, having launched operations in Kuwait and Bahrain in recent weeks.
The Company's net cash balance was approximately $45 million at period end. Cettire remains relentlessly focused on its strategy to grow profitably while self-funding. Due to the rapidly evolving market environment, the immediate focus remains on improving profitability.
Time will tell if Cettire can turn around its fortunes, but judging by its share price decline and market capitalisation, the market appears unsure if Cettire's business model is sustainable.
Just over one year ago Mintz sold $127 million worth of Cettire shares. The company's current market capitalisation is now lower than this figure.
