Out of fashion

It’s rare to see the market value of any listed company sliced in half in a single trading session. And when that does happen on the ASX, it usually involves a company at the smaller, murkier end of the market. Not one that only months ago was worth billions of dollars and on the brink of inclusion into benchmark indices.

Shares in closely watched online fashion ‘dropshipper’ Cettire plummeted almost 50% today, and all it took was a two-page market update containing a 20% full-year earnings downgrade to trigger the fall.

The once $2 billion, now around $430 million business cited a soft consumer market for luxury goods and a subsequent squeeze on margins for the downgrade, which has punched another hole in its once-indomitable growth story.

“Aside from the near term impacts to CTT’s earnings, we view this commentary as negative to the bull thesis that CTT could be beneficiaries as other online luxury retailers are exiting,” RBC analyst Wei-Weng Chen said in a note.

As Capital Brief has extensively documented in recent months, Cettire has been at the centre of an intense tug-of-war between true believers and hard-nosed sceptics this year. Today’s market reaction would suggest the sceptics are winning that battle, with a number of major questions about the business still unanswered.