I made this post on 6 March 2024 highlighting AFR's Shapiro's...

I made this post on 6 March 2024 highlighting AFR's Shapiro's warning on Cettire
Its Over, 72767086, page-20582 | HotCopper Forum

I always believe that when you first hear of something adverse about your company, that you ought to pull the trigger fast. Now if one had heeded Shapiro (whom I hold in strong regard as one of the best business investigative journalist) warning then on 6 March 2024, one could have got out at $3.99. Now it is at $1.11 after the profit downgrade yesterday, a steep -72% decline from when one could have exited after receiving the first cue that something was amiss.

Which is why I constantly remind people: No Denial No Procrastination.

When I start having bad vibes about any stock I hold, I own up to my mistake quickly and cut loss as soon as possible to avert a bigger loss. Most people would not be prepared to take a loss on the chin especially after just entering the stock for just a week or two. Sometimes it is bad luck, lack of due diligence or something totally out of the blue. But one thing I learn in my years of trading/investing smaller end of town - never hold hoping after adversity has emerged because

A Dog of a Stock Will Show You More Fleas over Time.

A small loss is a hit on the pride/ego (admission of being incorrect), a big loss however is a disaster owing to Denial & Procrastination. And worse, if you don't even bother to look at your stocks on a daily basis, you could get a rude shock wondering why the stock collapsed suddenly: Doing Nothing Is Doing Something.

1 year view
CTT Stock Price and Chart — ASX:CTT — TradingView
Brokers turn on Cettire after profit downgrade
Jonathan Shapiro and Carrie LaFrenz
Jun 25, 2024 – 2.55pm


Brokers have turned on former market darling Cettire, slashing their price targets in half after the online fashion retailer’s shock profit downgrade led them to question whether the company could restore its earnings power.

Cettire blamed intense discounting by its failing competitors as the factor behind its falling margins after it told the sharemarket its profit would be more than 20 per cent below the consensus estimate, implying an unprofitable fourth quarter.

Cettire shares traded lower on Tuesday. Dominic Lorrimer
But analysts are worried Cettire’s downgrade is evidence of broader problems and may reflect changes to its business model prompted by media scrutiny.

Barrenjoey analyst Aryan Norozi said he was inclined to believe Cettire that industry discounting was behind its profit miss but “given the magnitude and timing, we question whether there is a structural risk post Cettire’s pricing changes and recent media inquiry into duties”.

He said if “these issues are structural then Cettire has little valuation ‘floor’”.


In March, Cettire announced changes to its check-out process where customers would no longer be charged duties separately but would be charged an all-inclusive price, while duties on returned items would be refunded.
The changes followed a series of articles by The Australian Financial Review. They detailed how Cettire charged customers duties on a basket of goods that were not paid to customs officials, and in the United States declared goods at a lower value than the amount charged to customers, lowering duties paid relative to duties collected.
On Monday, the Financial Review revealed further issues. Cettire appeared to be applying one harmonised system code, used by customs authorities to identify products and duties rates, when billing the customer and another at customs. In one instance, the customer paid 16.4 per cent duties on a coat, but the item was declared as a sweater with a 6 per cent duty rate.

Cettire’s chief financial officer, Tim Hume, said it did not seek to profit from duty charges and said the harmonised system codes were not determinative in calculating duties.

Shares in Cettire traded 2.2 per cent down in Tuesday’s session at $1.11 after a near 50 per cent plunge on Monday that wiped more than $400 million off its market capitalisation.

Mr Norozi said that “some of Cettire’s downgrade is cyclical, however, its change in pricing policy and recent inquiry into its business practices also contributed to its downgrade”.

He cut his price target from $4.50 to $2.60 as he slashed its 2025 earnings forecast to just $15 million. That’s less than half of the $32 million figure Cettire said it would likely achieve in the 2024 financial year.

But he’s anticipating a recovery in 2026 and 2027 earnings, which supports his $2.60 price target.
Meanwhile, RBC Capital Market’s Wei-Weng Chen cut his price target from $3.80 to $1.50 and forecast a slight increase in profits in 2025 to $33.1 million.

He said Cettire’s negative weak quarterly profit coincided with a softening in the luxury market and “changes in Cettire’s business practices resulting from heightened investor and media scrutiny”.

“The extent to which either or both have impacted on FY24 results is not clear to us and therefore makes it difficult to have confidence in the stock or earnings outcomes”.

He said a share buyback was unlikely despite the company’s $100 million net cash position because slowing or negative growth “could result in a material unwind of Cettire’s cash balance”.

He also noted the adjusted earnings guidance of $32 million to $35 million excluded the “unquantified level of costs associated with managing Cettire’s negative media scrutiny”.