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STOCK WATCH: Has ASX E-Com Hit Rock Bottom?

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By Published On: February 8, 20220 Comments

The ASX E-Com index has fallen hard and fast. But has it bottomed? With Kogan, MyDeal and Redbubble lifting, all signs point to....maybe?!

The ASX Listed E-Com Index has been hammered in December and January, with double-digit losses across the board. But does this poor performance mean the online retail market has bottomed? Or is there further to fall?

In the last 90 days, the ASX200 has shed 3.5% while the ASX Listed E-Com Index has lost a massive 37.7%. In the shorter term, we are seeing signs of revival, with the ASX200 gaining 2% and the E-Com Index losing just 1.4% (I mean, it’s all relative, right?).

The best performer in the last seven days is MyDeal, up 5% to $0.63 at close of ASX on Monday. It’s far from the $0.90 we saw earlier in 2021, but an improvement on the $0.56 it recorded in May last year, so given the current landscape, it’s faring alright. Also making gains in the last week, Redbubble is up 2.5% to $1.83  and Kogan up 1.8% to $6.30. It’s been a volatile few months for these e-com heavy-hitters but there appears to be some shift in investor sentiment.

Booktopia is also showing signs it may have turned a corner after a disappointing few months, closing at $1.2o on Monday. This marks a 3.4% gain over 14 days (albeit a 3.6% loss over the last week). It seems some companies are in a period of limbo ahead of results announcements. Similarly, Adore Beauty is down 3.9% to $2.98 and Temple & Webster is down 3.4% to $8.19.

Graph of 14 day ASX Listed E-Commerce Index performance

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

Luxury fashion retailer Cettire last week delivered its H1 FY22 results presentation, reporting a 192% increase in gross revenue to $154.1 million (more revenue than what was generated in the entirety of FY21). It also reported a sales revenue increase of 181% to $113.7 million, and its active customer base grew 208% to 209,000.

“A lot of the themes from our FY21 results continued in the first half of FY22. Cettire again grew very rapidly, substantially increasing unique visitors and active customers, further increasing the proportion of revenues from repeat customers, and overall continuing its growth trajectory,” said Dean Mintz, the CEO of Cettire.

Despite this, Cettire’s share price fell dramatically, from $3.02 at close last Wednesday and down to $2.34 at close on the Thursday following the announcement. With huge figures ($25.9 million) funnelled into marketing and advertising to push its growth in this half (550% more than the previous year at just $3.9 million) it reported an $8.3 million net loss.

“What excites us is that Cettire has only just started and is in the early stages of its growth journey. The runway ahead is vast and we will continue to invest to capture the significant market opportunity we see for the business,” Mintz said, though the investor response seemed less certain.

Mintz flagged in the company’s H1 FY22 results announcement that: “Our focus for the remainder of FY22 is to continue to enhance our customer proposition which is centred around our vast selection of luxury products, value and rapid fulfilment, whilst continuing to develop our deep and diverse supply relationships and investing in our world-class proprietary e-commerce technology that can be rapidly scaled to support entry to new product and geographic markets.” Just yesterday, it announced its planned entry into China. The share price lifted from its post-reporting slump of $2.34 to $2.85 at close on Monday.

“China represents a vast market opportunity and it is core to our strategy to make our world-class proposition available to additional markets. Today’s announcement is another step in our strategic journey to achieve this goal.”

While the initial market response was positive, it hasn’t maintained an upwards trajectory (down to $2.66 at the time of writing), and whether this impacts Cettire’s value in the slightly longer-term remains to be seen.

BikeExchange is bringing the Index down slightly, shedding 16.7% over the last week, now down to $0.10 (at close on Monday) and making it the worst performer in the Index.

The question remains, is this the rock bottom from which we’ll start to see an upwards trajectory? For some, including Kogan and Booktopia, this seems to be happening already (albeit a slow-burn rather than massive overnight gains). Yet for others (or perhaps just other…ahem, BikeExchange), it seems there could be further to fall.

Figures are current as at close of ASX on 7 February 2022. This is analysis only and not intended as investment advice.

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About the Author: Natasha Scholl

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