Cettire, an Australian online retailer specializing in luxury fashion, has seen its stock price plummet amid concerns about its business model and potential tax evasion. The company's success during the pandemic hinged on offering discounts by connecting buyers with distributors selling excess inventory from major brands. However, increasing competition and allegations of exploiting duty loopholes have cast doubt on its future.
The issue for investors is whether it is merely in the bargain bin due to the intense competition – including from major brands such as Burberry and Victoria Beckham, unusually, discounting on their own websites. Or, whether its 2024 financial results confirming there are seriousVictoria Beckham’s fashion business is among those making life difficult for Cettire with its own discounting.
But its Cinderella story contrasted starkly with failing rivals such as FarFetch in a sector surviving on low profit margins. But controversy raged over reported discrepancies in what duties it charged customers and how much of this was actually paid to the authorities – especially in the US, its major market.In its response to the allegations, Cettire said: “All applicable duties and other import charges are paid to the relevant authorities at the point of customs clearance.” It denied it was overcharging customers.
“Some of the particularly unusual things that we saw in spring/summer ’24 was brands themselves doing heavy discounting on their own websites,” Mintz told analysts and investors on the group’s conference call. It would mean its reported revenue would drop, but no other significant financial indicators, it told the ASX.
This would clarify whether Cettire is reliant on duties arbitrage, and returns fees, for its bottom line, as claimed by short sellers and other critics. To give an idea of how much this has enraged Cettire’s management, the retailer revealed in its accounts that it had spent more than $900,000 on “short campaign costs” in a matter of months to combat the short sellers.
Cettire Luxury Fashion Stock Market Duty Arbitrage Tax Evasion
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