Cettire reports annual profit for first time since listing as sales double

Luxury fashion e-commerce group Cettire (ASX: CTT) has recorded its first ever statutory net profit after tax as an ASX-listed company, swinging from a $19 million loss in FY22 to a $16 million profit in FY23 after sales revenue doubled and active customer numbers surged.

The business was listed in December 2020, three years after it was launched by its enigmatic founder Dean Mintz via his tech innovator Ark Technologies.

The company's share price chart resembled a mountain in its first 18 months on the ASX, rising close to tenfold from 48c to a high of $4.31 and back down to earth again, but since mid-2022 it has been steadily rising. At the time of writing, the CTT share price is up 17 per cent today at $3.28.

Cettire reports sales revenue rose 98 per cent to $416.2 million in FY23, alongside several marked improvements in different metrics such as active customer numbers which were up 63 per cent at 423,000, and an eight percentage point lift in the share of revenue coming from repeat customers at 58 per cent.

At the same time, the company was spending less money on customer acquisition to achieve sales, with such expenses falling from 14.9 per cent of revenue to 8 per cent. Expenditure on brand investment was also down by more than two-thirds at $3.3 million.

"Cettire is a highly nimble business, with a largely flexible cost base. This enables us to adjust quickly to market conditions and optimise performance," says Mintz.

"The pace at which we have been able to drive improved performance through FY23 is something I am particularly proud of.

"Cettire stands out from other software and technology-enabled businesses globally for its ability to consistently grow rapidly, whilst achieving attractive levels of profitability and capital efficiency. We are very well positioned to continue to grow share of the personal luxury goods market."

In FY23 the group rolled out multi-language features on its site including in Mandarin, Japanese and Spanish, while cursory research showed Cettire also has language options in Korean, German and Dutch.

This is part of a 'localisation' strategy that Cettire claims has facilitated further rapid growth within its emerging markets, with FY23 gross revenues in these markets increasing by 140 per cent year-on-year. This segment accounts for more than a quarter of gross revenue.

Much of Cettire’s localisation efforts have focused on the Chinese market launch. Due to the scale and significance of the opportunity, the company states it has taken a disciplined approach to setting up its Chinese proposition, doing so in a way that affords Cettire the greatest optionality around channels to market.

The group highlights opportunity to grow penetration in its top three established markets of the US, UK and Australia remains substantial, with this segment having grown 77 per cent year-on-year with the highest growth coming from the US where sales roughly doubled.

In addition, Cettire added more luxury brand supply relationships in FY23, including the commercial agreement with Zegna announced on 15 December 2022 to directly integrate and sell its products on the Cettire platform.

"We have considerable momentum in the supply chain as our compelling supplier proposition gains traction. Our focus is on continuing to drive penetration across the supply chain, which in turn enables us to better serve our customers," says Mintz.

"FY23 has been another year of tremendous growth and transformation for Cettire. Through strong execution against our strategy to maximise profitable revenue growth, Cettire grew rapidly whilst also delivering significant profitability and cash generation."

The e-commerce player notes sales momentum has continued in FY24 thus far, with further acceleration in the active customers growth rate to 67 per cent in July, and sales up even higher year-on-year at 120 per cent while adjusted earnings profitability has been maintained.

"We are pleased by the early trading in FY24, with all our key markets performing strongly. Cettire is well positioned for another strong year of growth and profitability," concludes Mintz.

"We are well advanced in our preparations for China market entry, which remains a very attractive market opportunity and offers significant incremental growth potential."