Luxury fashion retailer, Cettire Limited (proposed ASX: CTT), are set to join the likes of Booktopia and MyDeal, expecting to list on the exchange later this month after what has been a growth period for many exclusive online retailers this year.
Cettire is a global brand which sells luxury personal items such as clothing, shoes, bags and accessories via their website. Cettire.com holds over $500M of stock, offering 160,000 products across more than 1300 brands including Gucci, Prada, Dior and Versace.
What sets Cettire apart from other retailers is that they don’t hold any inventory themselves, with some products able to be sourced from multiple suppliers. This method mitigates the inherent supply chain risks of holding stock or not being able to source stock, and ensuring they acquire the goods for the best price, which in turn allows for the highest margin. Similarly to other online retailers such as MyDeal and eBay, the products are shipped directly from the supplier to the customer, with the Cettire platform facilitating the transaction.
The company has developed their own proprietary tech platform that automatically integrates inventory levels with suppliers and allows for pricing strategies to manage stock volume and margins. The platform also allows for global logistics to be largely automated with the ability to scale, ensuring that the company would be able to quickly handle an influx of customers and orders if required.
The global personal luxury goods market is currently estimated to be around $550B, and is expected to grow at 3-5% per year until 2025 (Bain & Co. 2019). The pandemic has had a positive impact on the online component of the industry, increasing 22% from 2019 and representing a total of 12% of the personal luxury goods market (BCG 2020). The significant uptake in the online shopping industry as a whole stemming from the pandemic may have impacts into 2025 as trends in consumer behaviour shift, a positive outlook for the sector.
The company has been able to report significant growth in revenue since beginning in 2017, recording over $22M in revenue in FY20, with more than 90% derived from international markets such as China. The revenue represents a 547% increase from their FY18 revenue of just over $500k. The company also recorded their first profitable year in FY20, recording a NPAT of $524k, an impressive accomplishment for the small cap.
From the $65M being raised under the offer, $25M will go to the Founder and CEO of the company, Dean Mintz, who is currently the sole shareholder. The company is allocating almost 37% ($14.8M) of the remaining $40M to support the company’s future growth strategy. 28% ($11.2M) is anticipated to be invested into Advertising and Marketing costs which the company uses to acquire most customers, which currently infers a ROI of over 3 times. 25% ($10M) is planned to be used for investments in their tech platform, with the remaining 10.1% ($4M) going to the costs of the offer.
The company is looking to raise $65M at an offer price of $0.50 per share, with the offer formally closing on December 11. The listing would give the Australian-headquartered company an indicative market cap of $190M and an enterprise value of $154M. The IPO would mark the first external capital investment into the company, with the publicity and awareness surrounding it being a publicly traded enterprise seeming to attract the company. Bell Potter Securities Limited are acting as Underwriter and Lead Manager for the offer.
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