Cettire’s share price has plunged 85% in 2024 as revenue stalls, users drop, and deep discounting fails to revive its once-billion-dollar fashion empire.
Background: Cettire is the ASX-listed luxury marketplace that sells all the big fashion houses like Gucci, Moncler, Balmain, Fendi, Valentino, Versace and a whole lot more. It runs on a drop-shipping model, meaning it doesn’t actually stock any of the items.
What happened: While their market cap rocketed to over $1.8 billion during COVID, it’s fair to say it’s now on the clearance rack - we’re talking a value of less than $120 million. But things got even messier because Cettire’s revenue rose just 1.7% in the 11 months to 31 May. Next minute: Cettire's shares fell more than 30%.
What else: Next minute: Cettire's shares fell more than 30%. What's more concerning is that Cettire made a $6.9 million loss in the March and April months of this year alone.
What's the key learning?
💡In e-commerce, retailers can pull a few key levers to drive revenue, but every lever has a trade off.
💡For example, you can cut prices to get more sales and bring in new customers... but if you do it too often, your profits will vanish faster than a Dior bag at a sample sale. On the other hand, tou can hold prices steady and protect your margins… but you risk watching your customers disappear to cheaper pastures (aka the Zara sale).
💡In Cettire’s case, they’ve been pulling on all the levers all at once and still not seeing results. It’s been discounting heavily, but active users still fell 3.5% since March. With poor performance and no Birkin-sized miracle in sight… it’s no surprise that Cettire’s share price has fallen by 85% since the start of this year alone.
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