Only a handful of companies within the S&P/ASX All Ordinaries (ASX: XAO), or ASX All Ords, have mustered up year-to-date gains of more than 100%. One of those high-flyers is online luxury fashion retailer Cettire Ltd (ASX: CTT).
Ascending 154% since the turn of the new year and now trading at $3.18 at Monday’s market close, the luxury retail share is the second best-performing company among the All Ords — rising from the ashes of a destructive year in 2022.
Those who have missed out on this sensational performance might now wonder whether buying Cettire is still ‘in vogue’ or an expensive mistake.
Is this ASX All Ords share still a buy?
Valuing a loss-making company is a challenging proposition at the best of times. Without any earnings, we can’t compare it to its peers using the price-to-earnings (P/E) ratio. Instead, the exercise becomes more concentrated on the growth potential.
Unsurprisingly, investors have been drooling over Cettire and its phenomenally high revenue growth. In May, the company informed the market that its sales had jumped 122% to $141.3 million for the four months ending 30 April 2023.
Pouring fuel on the fire of excitement, April alone experienced a 160% sales revenue increase over the prior corresponding period. This signalled to the market that this ASX All Ords share is not merely maintaining its exceptional growth amid a slowing economic environment; it’s dialling it up.
Speaking on the rapid growth being displayed, Wilson Asset Management equities trader Will Thompson recently said:
They’re quite a small player in a big market and they’re growing quickly. There’s not a big amount of luxury brands that sell online, so [Cettire] are getting the benefit of that as well. We think it is a buy.
Another takeaway from Cettire’s May update was the proportional reduction in marketing spend. This area of expense declined to a high single-digit percentage of revenue — a solid outcome given consumers are contending with inflated living costs.
Defensive growth
Unlike other inventory-laden retail shares within the ASX All Ords, Cettire does not carry its high fashion stock. In conjunction with its luxury audience, this differentiator makes the company a resilient opportunity in the eyes of another portfolio manager.
Jessica Farr-Jones of Regal Funds Management remains bullish on Cettire in the face of compressed consumer spending. Talking with The Australian Financial Review last month, Farr-Jones expressed positive sentiment toward Cettire as it looks to enter China’s luxury market.
However, the company isn’t without its possible pitfalls. Analysts from several investment banks, including Deutsche Bank, have cautioned investors on the hot luxury sector. Commonly, the concerns centre around China’s reopening faltering.
