Adore Beauty rallies as it sticks to guidance, defying gloom

afr.com:

Adore Beauty shares raced to their highest in two months after the online beauty retailer defied the tougher retail environment to stick with its profit margin guidance for this year. Turnover and shoppers both grew in the first quarter.

New chief executive Tamalin Morton said Adore’s active customer cohort (meaning those who have purchased in the past 12 months) returned to growth, increasing 1.5 per cent to 803,000 in the September quarter. Over 2023, active customers fell 8 per cent.

Adore Beauty has more than tripled the number of private label items to 38 across three brands: Adore Beauty, AB LAB and Viviology. 

Ms Morton said there was a record 497,000 returning customers in the first quarter of 2023-24, up 4.7 per cent.

Despite cost of living pressures and weaker consumer sentiment, Ms Morton said the group remains on track to achieve an EBITDA margin of 2 per cent to 4 per cent this financial year. Adore is targeting 8 per cent to 10 per cent EBITDA margins in 2027, and 10 per cent growth long-term, driven by private label product expansion and more returning customers shopping via its app.

App visits increased 1.9 percentage points quarter-on-quarter, representing 26.5 per cent of Adore sales. Customers who shop on mobile tend to spend more, according to the company.

The stock jumped 9.3 per cent to $1 on Monday.

Adore posted revenue of $47.5 million for the first three months of financial year 2024, a 4.7 per cent increase, supported by a new subscription service and adding cosmetics, hair care and fragrance brands such as Nyx, Davines, Ralph Lauren, Viktor & Rolf and Mugler.

Ms Morton, a former Priceline Pharmacy chain executive, said the group made a sold start to the year, despite challenging conditions.

Ado