Adore Beauty Revenue Breaks Records, Warns of Revenue Decline as Inflation Woes Kick In

The online beauty retailer has reported an 11 percent increase in its revenue, hitting $200 million for the year. This is a 65 percent increase on its FY20 results (28 percent two-year CAGR), indicating a sustained level of growth, albeit not as massive as the business may have predicted. As such, the business is increasing its owned-media channels and reducing its reliance on paid marketing channels to balance its spending, as the business forecasts a more ‘subdued’ attitude from shoppers regarding purchase sentiment.

The retailer plans to double the investment in its owned brands to support scaling future revenue. Moreover, it will implement cost control measures to offset the potential decline in sales. Adore Beuaty has already indicated these potential headwinds, with revenue down 28 percent in the first seven weeks of FY23.

In FY22, Adore Beauty reported a 30 percent loss in its EBITDA to $5.3 million. However, it is a four percent increase on a two-year CAGR basis. Moreover, its EBIDTA margin of 2.7 percent is in line with the business’ guidance and reflects its re-investment.  Its gross margin is currently 33.3 percent, and is up 0.3 ppts on pcp. Its cash flow remains positive at $29.8 million – this is a 2.6 percent increase on pcp.

“FY22 has been another successful year for Adore Beauty, one in which we delivered record revenue, multiple record trading days, and strong growth across key customer metrics, while continuing to re-invest in the business,” shared Tennealle O’Shannessy, the CEO of Adore Beauty.

The online retailer recorded a 31 percent increase in its returning customers on pcp, a 115 percent increase compared to FY20. Currently, the retailer has 872,00 active customers, up seven percent from FY21. “Our growing returning customers remain the largest contributor of revenue, accounting for 70 percent of sales and driving higher average orders and annual spend,” O’Shannessy explained.

“Our changing active customer base now has a higher proportion of returning than new customers, with subscription-like retention rates after just two years on the platform. This highlights the resilience and future potential of Adore Beauty’s business. Our highly engaged and loyal returning customers are reflective of the broader premium beauty category, where customers are brand loyal, shop with beauty specialists and frequently re-purchase skin and hair products they use daily and consider essential.”

The business reported a four percent increase in content-driven impressions, supplemented by its native app, which contributed 7.7 percent of revenue in the first quarter of FY22 and 15.5 percent in the final quarter. Overall, the app generated 11.3 percent of revenue in the FY. “Our strategy is working, driving customer metric improvements throughout FY22, and positioning the business for sustainable long-term growth. Our scaling mobile app, loyalty program, and adjacencies directly support and drive revenue growth, retention, and lifetime value, and will continue to deliver benefits going forward,” O’Shannessy continued.

Looking ahead, the retailer does not expect to achieve an EBITDA of two to four percent in FY23 due to cyclical headwinds and its disciplined spending. Despite this, Adore Beauty forecasts that it will remain profitable on a full-year basis. Moreover, it predicts that the two to four percent EBITDA margin range will return in the full year of FY24. It is also forecast to reach an eight to ten percent EBITA by FY27.

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