Margin Pressures and FX Losses Cloud Cettire’s Luxury Market Outlook
Cettire Limited reports a slight 1.7% increase in sales revenue for the year-to-date FY25 amid ongoing global luxury market challenges, including US tariff impacts and volatile demand. The company focuses on emerging markets expansion and improving profitability despite margin pressures.
- YTD FY25 sales revenue up 1.7% to $693.8 million
- Adjusted EBITDA marginally positive at $0.5 million, impacted by $2 million FX loss
- Weaker demand in established markets, notably US, offset by emerging markets stability
- Delivered margin remains low at ~16% due to high promotional activity and fulfillment costs
- Expansion into Kuwait and Bahrain as part of geographic diversification strategy
Modest Growth Amid Market Volatility
Cettire Limited, the Melbourne-based global luxury online retailer, has released an update on its trading performance for the financial year-to-date ending 31 May 2025. The company reported a modest 1.7% increase in sales revenue to $693.8 million compared to the prior corresponding period, reflecting the ongoing challenges in the global luxury goods market.
Despite this growth, the operating environment remains volatile. Demand in established markets, particularly the United States, has softened significantly, a trend exacerbated by recent changes in US tariff policies. These trade uncertainties have led to elevated promotional activity across the sector, which has weighed on margins.
Margin Pressure and Profitability Challenges
Cettire’s delivered margin for the period remained subdued at approximately 16%, impacted by the continuation of heightened promotional efforts and increased fulfillment costs. The company’s adjusted EBITDA was a slim positive $0.5 million but was notably affected by a $2 million foreign exchange loss during April and May, highlighting the financial impact of currency volatility in its international operations.
Founder and CEO Dean Mintz emphasised the company’s commitment to improving profitability, noting that while the luxury market remains unpredictable, Cettire is focused on reducing promotional intensity and achieving fulfillment efficiencies to bolster margins going forward.
Emerging Markets as Growth Engine
While established markets face headwinds, Cettire’s emerging markets have shown more stable performance. The company recently expanded its footprint by launching operations in Kuwait and Bahrain, signalling a strategic pivot towards geographic diversification. This move aims to tap into new luxury consumer bases and reduce reliance on more volatile traditional markets.
Active customers slightly declined by 1.3% to 671,328, but gross revenue from repeat customers increased to 68%, up 7 percentage points from the previous year, suggesting growing customer loyalty despite market challenges.
Outlook and Strategic Focus
With a net cash balance of approximately $45 million at period end, Cettire remains well-positioned to self-fund its growth initiatives. The company’s immediate priority is to navigate the uncertain luxury landscape by enhancing profitability and maintaining its expansion into promising emerging markets.
Investors will be watching closely to see how Cettire manages the balance between promotional activity and margin improvement, as well as how effectively it leverages new market opportunities to offset softness in established regions.
Bottom Line?
Cettire’s next challenge will be translating emerging market growth and margin improvements into sustained profitability amid ongoing global uncertainties.
Questions in the middle?
- How will Cettire manage promotional intensity to improve margins without sacrificing sales momentum?
- What impact will continued US tariff policies have on Cettire’s established market revenues?
- Can expansion into emerging markets like Kuwait and Bahrain deliver meaningful growth to offset softness elsewhere?
