Share sales by the founder, opaque operations and a ballooning valuation: the luxury platform remains controversial with investors.
News of another share sale by founder and chief executive Dean Mintz – which saw him pocket $127 million and reduced him to a 30 per cent stake – came ahead of publication ofThe stock plummeted on Wednesday by 25 per cent before management held a call with investors to defend its position, claiming all applicable duties and other import charges are paid, and that Cettire has a direct arrangement with the Department of Home Affairs.
Ben Rundle, co-founder and portfolio manager of Hayborough Investment Partners, was an early backer who invested post-IPO, considered reinvesting, but opted against it. Before last week’s tumble, Cettire shares had gained 185 per cent over the past 12 months, as the company topped earnings expectations and flagged entry directly into China. At its high in February, its market capitalisation was nearly $2 billion.The online fashion emporium sells more than 2500 designer brands, offers in-season stock, but holds no inventory. Products come from third-party suppliers.
The personal luxury goods market is valued about $400 billion and growing. Mintz has told investors there are four buckets to selling luxury: brands direct to consumers; department stores that hold inventory; digital natives such as Mytheresa; and the drop-shippers Farfetch and Cettire.Last week, UK digital native Matches was tipped into administration.
”Cettire’s access to supply becomes a headache as it grows. A bigger reseller of luxury product may grab the unwanted attention of who do not authorise resale, particularly at discounted pricing.”
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