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Online luxury goods retailer Cettire (ASX: CTT) has alleged it is being targeted by short sellers who are amplifying claims through the media that non-genuine products are being sold on its platform.
The company today issued a statement to the ASX that an article published by The Australian contained “a number of claims and allegations that are untrue”.
The Australian today reported that an unidentified “global due diligence firm … has uncovered a complex company operating structure, opaque supply and logistics network and lax complaints-handling processes”.
The media publication also reveals it has undertaken separate inquiries that have revealed “how several customers have raised serious concerns about the quality and origin of luxury and designer products ordered from the Cettire website”.
The Australian says that “concerns have also been raised about the company’s complaints-handling processes” and that several complaints are being investigated by the Australian Competition and Consumer Commission (ACCC).
Cettire, which is led by media-shy founder Dean Mintz who founded the company in 2017, says it “rejects entirely the allegations regarding non-genuine products being sold via its platform” while also "categorically" rejecting "the entirely unfounded allegations contained in the article”.
The company also says it is not aware that its customer service practices are being investigated by the ACCC.
“In recent weeks, the company has been the subject of negative press articles that have sought to amplify the claims of parties who have openly taken short positions in Cettire shares and sought to profit from a short-term decline in the share price,” the company says.
“The Australian’s article cites a report commissioned by a short seller as primary source material.”
The ASX-listed luxury dropshipping group notes that it has not sighted the report by the unnamed due diligence firm or been given “an opportunity to comment on it or to check its accuracy”.
“The board is concerned that the claims in this article may further mislead and influence the market in a way that significantly and negatively impacts Cettire’s business and its shareholders,” it says.
The company's shares have retreated from a record high of $4.90 in February to a 2024 low of $2.38 last Friday. The shares recovered today to be trading at $2.54, up almost 7 per cent, at 11.14am (AEST).
Cettire notes that it aggregates more than $2 billion of luxury inventor, representing one of the largest selections of luxury goods globally and a figure that has more than tripled since the company’s 2021 IPO.
The Melbourne-based company operates a drop-shipping model that connects suppliers with customers for brands such as Dolce & Gabbana, Givenchy, Prada, Gucci, Saint Laurent, Balenciaga and Valentino.
“Cettire works with a large and diverse global supply chain, which includes inventory sourced both directly from brands and distributors,” says the company, adding that its supply chain is “one of its key strengths”.
“Cettire has the utmost confidence in the sustainability of its supply chain and the authenticity of all products available and sold via its platform.”
Cettire also denied claims in the report that it uses a number of suppliers from China, the Marshall Islands, Hong Kong, The Philippines and Vietnam. The company says it can confirm that it does not have product suppliers located in any of these countries.
The company says it only works with “established distributors in the luxury supply chain".
“All of Cettire’s suppliers source products directly from luxury brands and are a core part of brands’ distribution channels,” it says.
“All of Cettire’s supply arrangements are individually underpinned by legal contracts which contain strict and enforceable contractual terms, ensuring all goods sold via Cettire are genuine.”
Much of The Australian’s story was devoted to several customers who had complained of receiving non-genuine goods or of poor service from the company, including failures to process refunds.
“In Cettire’s business model, the supplier assumes the risk on a product return,” says the company. “Moreover, if a supplier became known as participating in non-genuine products, that supplier would risk severe reputational exposure in the supply chain.”
Cettire claims that none of the examples cited by The Australian contain “any verifiable evidence that a non-genuine item had been purchased via Cettire”.
“Based on information provided by The Australian, the items used as examples have not been inspected by either Cettire or the relevant manufacturer to verify their authenticity,” the company says.
Cettire has processed more than two million orders in the past seven years, with the company adding that there has not been “a single confirmed case of a non-genuine item being sold on Cettire’s platform”.
“Cettire takes customer service, fulfillment speed and product quality very seriously,” the company says.
“As a large-scale consumer facing platform, the company constantly listens to its customers, taking all legitimate feedback onboard to improve its offering.”
Cettire points to its latest customer metrics which show a “substantial improvement” in customer retention over the 12 months to the end of March this year. Some 62 per cent of gross revenues in the third quarter of this financial year came from repeat customers, the company says.
“These metrics provide Cettire with strong proof points that its proposition is not only resonating with consumers, but also improving over time.”
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