Cettire Faces Going Concern Questions Amid US Trade Policy Impact

Revenue and Profitability Under Pressure

Cettire Limited, the luxury e-commerce retailer, has reported a 2.8% decline in revenue to $382.8 million for the half-year ended 31 December 2025, compared to $394 million in the prior corresponding period. The company swung to a net loss after tax of $1.05 million, down from a $4.75 million profit a year earlier. This reversal reflects a challenging environment, particularly in the US market, which remains the group's largest revenue contributor.

US Market Headwinds and Trade Policy Impact

The softness in US demand was attributed to a combination of reduced consumer spending and the removal of the de minimis duties exemption from August 2025, which increased import costs and complicated pricing. These trade policy changes led to higher fulfilment costs and pressured gross profit, which fell from $70.8 million to $54.8 million. Excluding the US, Cettire's sales revenue actually increased by 13%, signalling ongoing market share gains in other regions.

Operational Adjustments and Customer Metrics

In response to the tougher conditions, Cettire significantly reduced its advertising and marketing expenses by 42%, from $30.9 million to $17.9 million, reflecting a strategic shift towards profitability over growth. The average order value rose 17% to $961, while active customers declined 12% to 613,078, partly due to softer US demand and lower marketing investment. The company also expanded its product availability, increasing in-stock items to approximately 323,000 from 200,000 a year earlier.

Financial Position and Going Concern

Despite the loss and a net current asset deficiency of $51.6 million, Cettire ended the period with a robust cash balance of $61.4 million and zero financial debt. Positive operating cash flow of $37.1 million underscores the resilience of its drop-ship business model, which benefits from upfront customer payments and supplier credit terms. The directors acknowledge material uncertainty regarding going concern but remain confident based on cash flow forecasts and potential mitigating actions, including cost reductions and financing options.

Outlook and Strategic Focus

Cettire’s management is focused on navigating the evolving luxury retail landscape by balancing growth with profitability. The company’s ability to maintain strong cash flows and adapt to regulatory changes will be critical as it seeks to stabilise its US operations and capitalise on growth opportunities elsewhere. No dividends were declared, reflecting the cautious stance amid ongoing market uncertainties.