Pinned straw:
Quite the market reaction to Cettire's update today, with shares down ~40% at the time of writing.
Here's what they said (full announcement here)
Pretty good growth right? Well, it looks like the current Q4 is a shocker when you realize that Cettire was reporting EBITDA of $32.1m in April for the first 9 months of the year, and $545m in revenue.
So they are expecting a further ~$200m in revenue this quarter, but virtually no more operating profit. So they seem to be only able to move inventory by selling it for cost, and some impact from added costs perhaps associated with the China Launch.
Anyway, given today's drop shares are on a EV/EBITDA of ~12x
Doesnt seem too expensive, but only if you expect profit growth to return. Which maybe it will when competitors stop heavily discounting?
I dunno, but a reminder of how much and how quickly things can change in retail.
Thanks to Claude walker for talking me out of this one… listening to the baby giants podcast just paid for itself! Hang on, it’s free. In any case, thanks Claude. Feel free to pass on my thanks @Strawman
Just a coincidence they changed how the collect tax in the US at the end of last quarter which potentially removed the 8%-10% cost advantage they had over everyone else.
I think that downgrade belies the fundamentally weak nature of dropshipping. Once the tax arb was removed CTT looks as wildly unprofitable as every other luxury dropshipper.
Remember when KGN was selling phone cases from Vanuatu (of Fiji – I forget) to avoid the GST and then the government removed that loophole?
Looks like the shorters were right.
No competitive advantage - more like some dodgy tax and return policies.
The fact they waited 12 months when the slowdown was flagged by all of their competitors too...
Nice sales by the CEO too. Def like KGN.
Surprised Regal were caught in it too...