Is Adore Beauty Taking the Next Big Step Forward?

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By Published On: August 7, 20200 Comments

Adore Beauty is currently experiencing a stellar few months as online retail continues to grow exponentially. The beauty retailer, founded by Kate Morris in 1999, has continued to go from strength to strength over the last few years and shows no signs of stopping anytime soon.

When the nation-wide lockdown was announced on March 23, there was a shift from physical shopping to online. Due to the unprecedented event, many retailers were unable to handle the influx of orders coming from every corner of e-commerce.

While Adore Beauty suffered a few small hiccups with delivery in the early stages of lockdown, along with many others, it quickly found its feet while scaling up simultaneously.

“We had to turn off express delivery options for a while, and tried to do all we could to manage customer expectations around delivery timeframes. Fortunately, these issues have largely all resolved now,” Morris told AFR.

Even though makeup lovers were sat at home with no place to go, sales for handwash, hand sanitiser and soap soared 300 percent at the beginning of the pandemic.

“We first saw that big spike when all of a sudden handwash and hand sanitiser just went nuts,” Morris told Power Retail in May 2020. “Hand sanitiser isn’t usually a big category for us, so we didn’t have any controls in place to limit that, and all of a sudden it was gone.”

Furthermore, the pureplay retailer has experienced a month-on-month growth of skincare (112 percent), home fragrances (105 percent) and its sex category (45 percent). Its growth of overall sales is up 100 percent YoY.

“We had to start doing a lot of comms around acknowledging what was happening and saying ‘We know there’s a lot more going on in the world than beauty products’, but we’re going to keep talking about beauty products because we think it’s not healthy for us all to think about pandemics day and night,” she said.

The bar is set high for the skincare and beauty category, and it looks like Kate Morris’ team is going to push the bar even higher.

In a report from AFR, Adore Beauty is ‘calling for pitches’ from investment banks to help it go public.

The online retailer is currently majority-owned by private equity firm, Quadrant Private Equity. Reports suggest that Quadrant would sell part of its 60 percent stake into the IPO, with Morris and Co-Owner James Height selling part of their 40 percent stake.  According to the sources to the AFR, the deal would likely comprise an approximately $200 million raise for an evaluation of $500 million.

The growth in popularity for online makeup retailers is something set to stay, with many shoppers turning to e-commerce rather than enter brick and mortar stores. With the latest increase in restrictions across Melbourne, the trend is set to stay even longer.

The retailer has proven itself of its innovative strategies and goals time after time. Whether it’s cutting out 235 kilos of waste a week to its personalised customer experience, there’s plenty for Morris to proud of within the category.

At the time of Quadrant’s investment into the company, Adore Beauty was estimated to be worth $110 million, AFR suggests. With the unprecedented expansion within the online category, this evaluation is said to have grown even further.

Kate Morris has spoken previously about the relationship Adore Beauty has with Quadrant. “Quadrant has had a lot of experience with businesses at the stage that we’re at now and helping them get to the next level,” she told Power Retail in 2019. “It’s always good knowing that you’re doing it in partnership with someone who’s done it before and knows all of the traps and pitfalls. It brings a bit of a different perspective from the 70 other business that they’ve invested in previously.”

Quadrant Equity Firm is one of the only firms that expects to post a record $100 million in sales this year. It has been a rough year for equity firms, with at least five PE-invested retailers collapsing or filing for voluntary administration in 2020. These include Seafolly, Tigerlily, Colette by Colette Hayman, TM Lewin and PAS Group. The former two have since been saved from collapse.

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