Cettire Ltd (ASX: CTT) shares are on the slide on Thursday morning.
In early trade, the online luxury products retailer's shares are down 20% to $1.07.
This follows the release of its unaudited FY 2024 results.
Cettires shares crash on results day
- Gross revenue up 81% to $978.3 million
- Sales revenue up 78% to $742.3 million
- Adjusted earnings before interest, tax, depreciation, and amortisation (EBITDA) up 10.9% to $32.5 million
- Net profit after tax down 34% to $10.5 million
What happened in FY 2024?
For the 12 months ended 30 June, Cettire reported an 81% increase in gross revenue to $978.3 million and a 78% lift in sales revenue (gross revenue less returns) to $742.3 million.
Management advised that its top line growth was underpinned by a 64% increase in active customers to over 692,000, higher average order value, and higher levels of repeat customers. In respect to the latter, repeat customers accounted for 61% of gross revenues in FY 2024, which is up from 58% in FY 2023.
The company believes the ongoing growth in active customers and the sustained strength in repeat customer purchasing behaviour demonstrates Cettire's proposition is continuing to resonate strongly with customers.
Things weren't quite as positive for Cettire's earnings, with the company experiencing significant margin pressures. This was partly due to its paid customer acquisition expenses, which increased to 9.5% of sales revenue from 8% in FY 2023.
The company's adjusted EBITDA margin fell 2.6 percentage points to 4.4%, which limited its adjusted EBITDA growth to 11% to $32.5 million. And on the bottom line, Cettire's net profit after tax was down 34% to $10.5 million.
Why are its results unaudited?
The company notes that its financial audit for FY 2024 is still progressing and taking longer than in prior years. This is because it is conducting more comprehensive processes following recent market commentary, and the auditor (Grant Thornton) is undertaking additional audit procedures on an expanded scope.
It notes that the remaining substantive audit matter is a technical review of revenue recognition. Since its IPO, Cettire has adopted a revenue recognition policy whereby it recognises revenue as a principal not an agent, and revenue as the gross selling price net of rebates, discounts, and refunds.
The company believes that its current treatment is appropriate. As a result, the FY 2024 preliminary financial report has been prepared on the basis that Cettire is the principal.
Management commentary
Commenting on FY 2024, Cettire's founder and CEO, Dean Mintz, said:
Our unwavering pursuit to deliver on our strategy has served us well to date and underscores the many achievements in FY24. Our continued focus on driving profitable revenue growth while expanding our global footprint and remaining self-funding is key to the long term sustainability of our business.
With strong relationships across our diverse and growing supplier base, our unrivalled proprietary technology and the efforts of our highly talented and nimble Cettire team, I am extremely confident we will continue to successfully deliver on our strategic objectives.
Outlook
Management advised that since the start of FY 2025, the global luxury sector has continued to experience softer trading conditions. This has seen increased promotional activity.
Nevertheless, Cettire's sales revenue growth is tracking ~20% for July and August and it expects its adjusted EBITDA to be positive in the first quarter.
