Despite the gloom in retailing, catering to aspirational and wannabe consumer groups is still paying off handsomely for Melbourne-based luxury goods website Cettire
(ASX:CTT), which reported its best half-year performance ever.
In fact, there was no sign of any impact on Cettire's business from the 'income recession' that gripped the economy for much of 2023 as households battened down the hatches amid falling incomes.
The only groups in the community not to feel the pain were those without mortgages and retirees over 60 with fat, tax-free income streams from full imputed dividends.
Cettire specializes in luxury personal items such as clothing, shoes, bags, and accessories for both men and women from leading luxury brands. Despite rising interest rates, faltering consumer spending, and flagging confidence, its customers continue to open their wallets, flash their credit cards, and buy, buy, buy.
The company's founder and CEO, Dean Minz, stated that the December half-year was "our strongest trading half since we went public several years ago" as more customers returned and spent more.
Cettire's entire range of goods consists of discretionary items, a sector that had been struggling elsewhere. However, Prada and Gucci geegaws are very much discretionary, especially for those with plenty of income not needed to cover mortgages or school fees.
Cettire reported that gross revenue surged 90% to $460.5 million in the six months ending December 31, 2023, compared to the same period in 2022, driven by growth in both order volume and average order value.
Sales revenue also saw a substantial increase, surging 89% to $354.3 million. Repeat customers accounted for 58% of gross revenues, up from 56% in the December half of 2022, with higher average spending per order and increased order frequency among this customer group.
Cettire's strong financial position and sustained repeat customer purchasing behavior, combined with an attractive market environment, provide the company with confidence to invest in global growth.
By the end of December 2023, the company had seen an 83% increase in active customers to 575,888, compared to the previous period. The fourth quarter of 2023 marked a record for quarterly net active customer additions, driven by strong conversion of increased marketing investment into new customer additions and a significant improvement in 12-month retention.
Delivered margin jumped 75% to $82.2 million, or 23.2% of sales revenue. Cettire's adjusted EBITDA also saw substantial growth, reaching $26.1 million, up from $16.7 million in the December 2022 half-year.
As of December 31, 2023, the company reported having $100 million in cash on hand and no debt. Cettire stated that it was preparing to expand its presence in the Chinese market, improve its app experience for customers, and enhance its supply chains.
The December half-year surge has continued into the early weeks of the June half-year of 2023-24, as indicated in Wednesday's release, while the company has maintained its adjusted EBITDA profitability.
With all these positive developments, it's no wonder that Cettire shares have risen by 86% in the past year, closing at $3.17 on Tuesday.
