Cettire (ASX:CTT), the online luxury retailer, has received a clean bill of health for its financial accounts after a thorough audit by Grant Thornton.
The audit focused on the company's revenue recognition practices and was completed nearly a month after Cettire released its unaudited full-year results.
The confirmation of the completed audit on Sept. 24 led to a significant surge in Cettire's shares, which rose 70.7% to $2.27 by early afternoon.
Cettire boasts a vast selection of products from over 2,500 luxury brands, including renowned names like Gucci, Christian Dior, Givenchy, and Burberry.
Cettire operates on a drop-ship model, meaning it does not maintain physical inventory but instead sources products directly from third-party suppliers.
The business structure prompted questions about whether Cettire acts as an agent earning a commission or as a retailer.
Grant Thornton has affirmed Cettire's classification as a principal in drop-shipping transactions.
For the 12 months ending June, Cettire reported a profit of $10.5 million on revenues of $742.3 million.
Despite this positive financial outcome, the retailer has faced allegations concerning counterfeit products being sold on its platform, claims that Cettire has vehemently denied.
Additionally, the company was required to provide extra financial disclosures in July following inquiries from the Australian Securities Exchange.
In its August report, Cettire acknowledged the ongoing challenges within the global luxury market, noting that softer trading conditions persisted into the new financial year.
The company highlighted increased promotional activities as it worked through remaining inventory from the Spring/Summer 2024 season, with clearance sales becoming more common among online retailers.
Cettire also announced the appointment of Caroline Elliott, former COO at fashion label Kookai, as a non-executive director on Sept. 24.
This addition aims to bolster the company's leadership as it navigates the evolving landscape of luxury retail.
At the time of reporting, Cettire’s share price was $2.31.