STOCK WATCH: E-Com Index Outperforms ASX200

Investors may have sold down tech and e-commerce shares in the wake of post- / mid- (where are we now?) pandemic concerns, but the sector is off to a cracking start on the ASX this week. The ASX Listed E-Commerce Index is up 14.6% over the last seven days, the strongest we’ve seen it for some time. In comparison, the ASX200 is up 1.6% over the same period.

E-Com growth is being driven by Redbubble, which is up 15.4%, Temple & Webster which is up 17.6% and Cettire which is up….*drumroll* 56.6%. Its jump in the last few days is perhaps surprising given the reception after its FY22 results were on par with others in the space such as Kogan and Adore. In fact, with delayed expansion plans to China and less than stellar growth, the Cettire share price initially tanked.

It could be that the market was waiting to see if Founder and CEO Dean Mintz would offload his shares as soon they came out of escrow.  A quarter of the 251,238,220 escrowed Cettire shares were released in February this year. In late March, Mintz sold down 35 million shares in the company (representing 9.18% of the Company’s issued capital), pocketing over $47 million. The market did not respond well to the announcement, with the Cettire share price plunging. With Mintz holding on to the shares that came out of escrow on 30 August, it seems a different message was being sent to the market.

Cettire may be the best performer in the last week, but overall, Temple & Webster seems the more consistent one to watch, with far less volatility over the last year.

Source: ASX Listed E-Commerce Index based on ASX reporting for the period

Even Adore, Booktopia and Kogan are showing signs of life, I mean growth, this week, up 8.7%. 5.9% and 9.8% respectively. The worst performer was BikeExchange, down 9.1% in the last seven days.

Last week’s Stock Watch reported a levelling out or recalibration of e-com shares and this trend has continued. And while the 14.6% growth across the E-Com Index over the last week is encouraging, year-on-year, it’s actually shed a massive 63.6%. The ASX200 has lost 7.5% in this time. So….perspective, and all that jazz. Its short-term lift speaks more to the decimation of the pureplay retailers on the ASX in the last year plus, rather than confidence in the industry as a whole. Whether these companies can continue to achieve scale, a theme of each full year presentation, remains to be seen. There is certainly a focus on reinvestment, acquisition and streamlining costs, but can any true gains can be made here? While consumer confidence does seem strong given the current economic climate (I mean, expectations were low so, again, it’s all relative) and with Christmas spend coming early, online retailers are positioned well.

Sure, lessons were learnt. But with customer acquisition harder than ever (another theme from FY22 presentations), can anything substantially change? We’re sure to see more shifts in leadership (while we await announcements from Adore and Booktopia CEOs) and maybe even further Wesfarmers-MyDeal-type consolidation. Will we see e-com once again bathed under the golden light of investor adoration / hope? In the current climate, it seems unlikely. But as we’ve said before, online retail is resilient and full of surprises. So as always, we shall wait and see what’s next.

Figures are current as at close of ASX on 12 September 2022. This is analysis only and not intended as investment advice.

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