The Cettire Ltd (ASX: CTT) share price has gone up 42% in the last month. What's driving the ASX retail share higher?
For readers that haven't heard of this business before, it's a global online retailer of a large selection of personal luxury goods through its website. It sells products from over 2,500 luxury brands with 400,000 products, across clothing, shoes, bags and accessories.
The company's most recent update showed an acceleration of growth, rather than a slowdown like other retailers have reported such as Baby Bunting Group Ltd (ASX: BBN) and Adairs Ltd (ASX: ADH).
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Strong results continue
In the four months to April 2023, Cettire saw sales revenue of $141.3 million, which was an increase of 122% year over year. The average order size was A$742, an increase of 8% year over year.
April 2023 sales revenue grew by 160%. Management expects to maintain this monthly growth rate to the end of FY23. The April growth was further driven by growth in repeat customer revenue and active customer growth.
In FY22, repeat customers made up 50% of gross revenue, while the percentage was 56% in the FY23 first half.
The ASX retail share also said that active customers increased 47% to 371,749, which represents the number of customers that had made a purchase in the last 12 months.
The company made adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) of at least $7 million, on a delivered (profit) margin of over 20%. The business is seeing an increase in delivered margin per active customer, from $237 in the first half of FY22, rising to $300 in the first half of FY23.
Cettire revealed that its marketing investment (including brand investment) was in the high single digits as a percentage of sales revenue.
In FY23 to the end of April, it had made an adjusted EBITDA of at least $23.7 million, on sales revenue of $329 million.
It finished April with a net cash balance of $39 million.
The company said it continues to maximise profitable revenue growth while self-funding.
The Cettire founder and CEO Dean Mintz said:
Cettire is rapidly growing share in a large and growing global market, which benefits from the structural shift to online.
Can the ASX retail share keep performing well?
The Motley Fool's own Trevor Muchedzi said:
Cettire is an asset light marketplace that enable customers to buy authentic luxury brands from wholesalers & distributors around the world.
The personal luxury market is a $500 billion opportunity growing at 5% per annum. Whilst only 20% of those sales happen online today, we expect that to grow to 30% by 2025 as millennials and Gen-Z make up a growing share of the luxury goods customer base.
We consider Cettire a long-term play to ride the growth of "status-as-a-service" phenomenon.
