Luxury retailer’s fashion spree defied auditor’s survival concerns

When Cettire executives fronted investors for its December half results last week, they poured cold water on the warnings from the luxury retailer’s auditors that its survival was in doubt.

There are concerns the company’s cash on hand may not be enough for it to pay its bills as they fall due over the next year, a fact that they acknowledged, while also saying the accounts were “unqualified”.

This means the auditor thought the financial statements were in line with accounting standards.

“Let’s just be very clear that we have an unqualified set of accounts out today and that’s very clear from the report from the auditor. So I think that’s very important for people to understand,” chief financial officer Tim Hume told analysts and investors on a conference call.

“If you look back at our accounts in June, there was a current asset shortfall in June and also a note in our annual report around going concern.”

The auditor’s concerns are just the latest problem for Cettire.

There have long been worries from some about the company’s business model, and lately it has suffered from tax changes in the US that have dampened demand.

Its share price has plunged from $1 to a low of 25¢ over the past year – a bigger bargain than the Prada handbags on its website.

Another part of the problem is that luxury fashion consumers are also suffering from buyer fatigue and investors have lost confidence in Cettire’s mysterious ability to be so much more successful than its rivals.

The auditors are specifically raising concerns over Cettire’s ability to pay its bills as they fall due if the company doesn’t raise debt or more cash.

The gap between Cettire’s short-term assets like cash, and its estimated bills due this calendar year has risen from more than $27 million in June to $51 million as of December last year.

The company, founded by Dean Mintz, acknowledged it might need to either raise money from investors or from banks to meet the shortfall.

It points to mitigation efforts like cost-cutting and focusing its resources on loyal customers and new markets that “continue to grow very strongly” and the fact the company has no debt.

Mintz’s confidence about Cettire’s future can be the only explanation for the audacious gamble that it did not reveal to investors at the group’s financial results announcement last week.

Mintz had shrugged off Cettire’s potentially existential cash crisis and pursued purchasing a Canadian rival, Ssense, soon after it collapsed late last year. The Canadian company had failed in part due to the crisis that bedevils the entire sector, including Cettire: US President Donald Trump’s decision to charge duties on all goods entering the US, with no exceptions.

There was no requirement for Cettire to disclose its tilt at Ssense, but given its cash issues, it would have been an eye-opener for investors if the bid succeeded.

All of a sudden, the luxury goods that Cettire and Ssense sell online to the massive US market are subject to duties.

“Prior to the changes in the de minimis, the duties attachment rate in that market was a fraction of what it is today,” Hume said.

All of this cost is passed through to customers, but it has sent Cettire’s large US business into reverse, as it did for Ssense, which collapsed within weeks of the duties being applied.

But luxury fashion was suffering before this from consumer fatigue.

“Between the years of 2023 and 2025, consumer spending habits began to change and decline and Ssense began to face macroeconomic challenges. Ssense’s sales deteriorated during this period,” a report from EY said of the Canadian group’s collapse.

Cettire would not comment but it was one of the final bidders for the Ssense business, which was sold back to its founders for $C78 million ($81.8 million).

It was Mintz’s most audacious move since selling more than $300 million of his Cettire shares to investors, when the company was valued at up to $1.8 billion. Those investors have lost hundreds of millions of dollars as its shares plunged. Cettire is now near record lows and the entire company is barely worth $100 million.

It’s a long way from when the Aussie start-up stormed the world of high-end fashion during the COVID-19 pandemic by offering the latest fashions online at a significant discount to the official retail channels of the luxury brands like Gucci, Dolce and Gabbana, by getting discounted surplus stock from suppliers.

The economics looked brilliant. The company receives shoppers’ money before it pays for the designer goods from its web of suppliers, which ensures it is always flush with cash, even if it is temporary cash that must soon be paid to suppliers.

It holds no inventory and it needs only ensure the logistics of moving the goods from supplier to customer, taking care of any taxes and duties and customer support.

These are some of the factors that help explain why it is not in quite the same peril as its Canadian rival, which was once valued at $C5 billion. Ssense had a financially cumbersome model where it acquired the inventory it sold to customers.

This required much more staff and funding than Cettire. It is easy to see Cettire’s interest in dumping everything besides Ssense’s large customer base and weaning them onto its much more efficient retail model.

But nothing explains how Cettire was going to pull off this deal given its own market valuation was back around record lows of $100 million, as well as its cash issues.

Last year was a tough one for Cettire, which reported a loss and declining revenue throughout 2025 financials last June as it was crushed by competition and the first decline in the global luxury market outside of COVID in 15 years.

What the numbers last week revealed is the start of the damage being introduced by Trump ending the de minimis exemption.

Falling sales mean the positive cash arbitrage between customer payments and delayed supplier payments is getting unwound, sending its cash balance to a low of $37 million in June last year.

But that is not the only reason for its cash quandary. The IOUs are rising for its biggest creditor: the Italian government.

Cettire sells predominantly Italian luxury goods, which means it pays value-added tax on these goods and needs to apply to the Italian government for refunds, given most of its sales are then exported to the US.

More than $37 million worth of these VAT charges are classified as non-current, which reflects the fact that, in some cases, it takes a year for Cettire to get a refund.

Hume says: “Certain governments in Europe are notorious for being slow around managing their own payables, if you will, and can be particularly slow for foreign companies. And so I think this is a very frustrating situation, but it’s a major priority for us to convert it to cash.”

Good luck with that.

The current half year could be critical for Cettire’s survival, even if its founder doesn’t think so.

But then again, he is flush with more than $300 million in cash from selling his Cettire shares when investors drove the business to ridiculous valuations. It means he has more than ample funds to rescue the business if it all goes wrong, just like the founders of Ssense, who beat him to the punch and bought back their business last month.

“After months of uncertainty, the closing of the transaction marks an important milestone and affirms our ability to continue building Ssense for the long term,” the founders said in a statement last month after the deal settled.

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