Cettire shares plunge 50pc after profit warning; Dean Mintz’s wealth falls $125m

Investors dump Cettire shares after the luxury online retailer warned it will barely make a profit in the June quarter, blaming softening global trading conditions.

Dean Mintz’s Cettire has issued a profit downgrade.

Entrepreneur Dean Mintz has lost $125m of personal wealth in a day after revealing his luxury online retailer Cettire has barely broken even for the last three months.

Cettire said its fourth quarter has been hit by tough trading conditions in the global luxury market, which prompted a 50 per cent share price plunge.

Headed by the reclusive 38-year-old Mr Mintz – a member of The List – Australia’s Richest 250 – Cettire said it would achieve only a small profit at best in the three months to the end of June.

In a market update on Monday morning, Cettire said adjusted EBITDA for the full 2024 financial year was likely to be in the $32-35m range, two months after flagging EBITDA for the first nine months of the financial year was already $32m.

It means that Cettire will at best achieve a small profit or potentially even make a loss for the June quarter, and its full-year forecast result was about 20 per cent less than previous analyst forecasts.

“Since our market update in mid-April … we have observed more challenging market conditions. A softening demand environment and an increase in promotional activity has been visible across our footprint, particularly in the last several weeks as the market has entered the Spring Summer … sale period,” Mr Mintz, who has never given a media interview, said in a statement to the ASX.

“Additionally, we believe the market is currently being impacted by clearance activity as certain players exit parts of the market.”

Cettire’s shares were smashed on Monday, falling to $1.13 by the end of the day after at one stage hitting a 12-month low of $1.08, and are at their lowest levels since October 2022.

Mr Mintz, Cettire’s founder and chief executive, holds a paper stake of almost 30 per cent in Cettire, according to Bloomberg. His shareholding is now worth about $130m.

Cettire shares are down more than 60 per cent since January 1 and about 75 per cent since hitting a high of $4.90 on March 1.

Mr Mintz sold about $127m worth of his Cettire shares in early March after offloading $207m of his stake in three transactions between March 2022 and August 2023. He floated Cettire on the ASX in late 2021.

Cettire’s business model and Mr Mintz have been the subject of a series of articles by The Australian in recent weeks, which have detailed an investigation into the company’s complex supply network and customer service, while the competition regulator is probing complaints about its handling of disputes over refunds and defective goods.

A UBS sales trading note on Monday to clients highlighted Cettire had delivered its first major earnings miss since the depths of Covid.

“I wrote in my last note that EBITDA was critical for this company. Any miss would get punished because it could indicate that CTT is trying to ‘fix’ some of the issues that have been raised by the press and blogs,” said executive director Sujit Dey.

“It is also surprising to see that CTT is citing wider issues in luxury as a reason for the weak trading update. Usually, high penetration stories are immune to wider industry trends because they are growing off such a small base.”

UBS also warned that online retailers were typically at risk of having their margins competed away, even as they increased in size.

“To get higher sales, you need to spend more on Google/Meta,” the note said.

RBC Capital Markets analyst Wei-Weng Chen said Cettire’s latest commentary suggested it may not benefit from the exit of other online retailers from the market.

“We are concerned by the low end of CTT’s EBITDA guidance, implying a loss making 4Q (fourth quarter). Given CTT’s lean operations (circa 70 staff), we see limited recourse for self-help should challenging operating conditions persist,” he said.

Online players in the luxury goods market have confronted a challenging period, which saw Cettire’s rival Farfetch acquired in a rescue deal by South Korean group Coupang. That transaction provided Farfetch a capital lifeline and was completed in January.

In March, luxury retailer Matchesfashion collapsed owing more than £210m. That company held inventory rather than matching sellers with end consumers, which is Cettire’s model.

Mr Mintz also said Cettire launched its platform in mainland China on Sunday and was already processing orders.

“We intend to be measured in our approach to the market, with a broadening of our channel proposition over time as we seek to build presence,” he told the ASX.