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STOCK WATCH: Will Retention be E-Comm’s Undoing?
The Australian Listed E-Commerce Index is consistently outperforming the ASX200, but is investor confidence faltering?
On 14 October, Adore Beauty released its business update for the first quarter of FY22. It reported an increase of 25 percent on PCP to $63.8 million. The pureplay beauty retailer has increased its Active Customer base by 25 percent, now accumulating 874,000. Strong customer retention was a strong focus, securing a 63 percent increase in return customer growth on PCP. But is this enough for investors?
“Over the last 12 months, our loyal returning customers grew 63 percent, providing a strong foundation for future growth. Our returning customers become more valuable each year they spend on the platform, increasing both their basket size and order frequency over time,” said Tennealle O’Shannessy, CEO of Adore Beauty
The market response was initially positive, jumping from $4.93 at close on 13 October to $5.00 at close of the ASX on 14 October following the results. But the momentum didn’t continue, dropping from $5.00 back to $4.85 where it opened this morning, a 3 percent decrease in share price over 7 days. The lowest it has been all quarter was on 5 October, where it closed at $4.36, so comparatively, it is still in a strong position, also recording 5.9 percent growth over 30 days. It has however shed 7.6 percent over three months. The question remains, what exactly do investors want when it comes to post-pandemic retention and growth?
MyDeal released its Q1 FY22 activities report on 18 October, and the market response was noticeably positive. It opened at $0.74 on that day of its reporting and opened at $0.85 this morning. Its share price has experienced 25 percent growth over 90 days and 12.6 percent growth in the last week alone. For the first quarter of FY22, 59.5 percent of all transactions came from returning customers, up from 49.7 percent in Q1 FY21. Its active customer base is inching to one million, now sitting at 930,000 – up from 894,000 in June 2021 and 670,00 in September 2020.
“I’m very pleased to announce another record quarter despite cycling a period of unprecedented growth,” CEO and Founder Sean Senvirtne said. The key focus for the retailer has been its ‘right not rushed’ strategy.
We’ve been waiting for some movement on Kogan, after a lacklustre few weeks. While it’s still down 6.2 percent over 90 days, we can see some improvement in the shorter term. Opening at $10.93 this morning, it was up 7.2 percent over the last week and 7.5 percent over the last 30 days. This morning it released its Q1 FY22 results. Gross profit declined 1.7 percent year-on-year but 31.6 percent quarter on quarter to $52.5 million. “While overcoming many challenges, the Kogan.com team has continued to deliver strong growth while investing in the future of the business and incubating new ways to deliver more value to our customers over the long term,” said Founder and CEO Ruslan Kogan. The market reacted positively to the results with an immediate increase in share price value (up from$10.93 this morning to $11.66 at time of writing). Whether its growth will continue and we will see the +$13 share price we were seeing earlier in the year remains to be seen.
Last week we questioned whether Cettire had plateaued. It does seem that it has now stabilised after some enormous growth (rebounding after its trading halt earlier in the year). At $3.19, it’s up 47 percent in the last 90 days, but has shown little movement in the last month, with -0.3 percent over 30 days, 0.3 percent in the last fortnight and 0.9 percent in the last week. Similarly, Temple & Webster’s share price grew 19.6 percent over 90 days, but closing at $12.62 on Tuesday. It has shed 3.8 percent in the last month and experienced a small boost of 2.8 percent in the last week. Redbubble opened at $4 this morning, a dip of 13.4 percent over the last week. We expect this to change as we head into the holiday season. While BikeExchange was looking up last week, it opened at $0.17 this morning and has failed to continue on an upwards trajectory, dropping 5.6 percent over 7 days. Booktopia has also shed 3.5 percent in the same period, opening at $2.51 this morning.
The Australian Listed E-Com Index is consistently outperforming the ASX200, with 6 percent growth over 90 days compared to the ASX200’s 0.4 percent. In the last fortnight, the average for the Australian Listed E-Com Index is 4.1 percent compared to the ASX200 at 1.3 percent.
With the holiday and sales season looming, as well as NSW and Victoria progressing along their respective roadmaps, the next few months will be telling. Will online retailers be able to retain the surge of shoppers that they acquired during the pandemic? Will the boost from sales events and early Christmas spend be enough to encourage investors?
Figures are current as at close of ASX on 19 October 2021. This is analysis only and not intended as investment advice.
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