Optimistic despite tough times ahead: Adore Beauty releases 1HFY23 results

Adore Beauty has today shared results from its first half for FY23. With new CEO Tamalin Morton helming the business, the company announced it remains optimistic about growth opportunities despite voliatile trading conditions and predictions half two will fall flat on last years results.

The company has had a volatile start to the financial year, reporting a revenue of $93.6 million, down 17 percent on the prior corresponding period (PCP).

Adore beauty reported an EBITDA of $406k and EBITDA margin of 0.4 percent, reflecting lower operating leverage, inflationary pressures, and phased investments in key initiatives

The pureplay retailer reported a positive three-year CAGR of 22 percent, a result of bricks and mortar competition effected by lockdowns.

Returning customers drove revenue for the business, growing 10 percent on PCP to 481k, a three-year CAGR of 40 percent ; contributing 78 percent of all revenues. Adore Beauty cites its loyalty program in driving this growth, accounting for 63 percent of total revenue. The mobile app continued to scale, contributing 18 percent of revenue. Downloaded by 258k customers to date.

Another positive for the company, cash balance is up $296k to $30.1 million and a strong balance sheet with no debt.

“Adore Beauty continues to navigate the post-lockdown environment and is cycling periods of significant growth,” said CEO Tamalin Morton, who started her role in January. “Year-on-year revenue comparisons remain volatile given the vastly different trading conditions in the prior period, when many of our customers were experiencing lockdown.

“Encouragingly, we now have a record number of returning customers, who are contributing 78 percent of all revenue with larger basket sizes and more frequent orders than new customers. And we’re starting to see the early benefits of our strategic initiatives, which are designed to drive improvements in key customer metrics and support sustainable long-term growth.

Trading in the first seven weeks of half two has revenue down 7.8 percent on PCP, however sales through February have shown improvement and are up 3.7 percent on PCP. The company believes H2 FY23 is likely to be flat on PCP, as the company focuses on margins and remaining profitable.

Looking ahead, Adore Beauty is implementing cost and margin optimisation programs, to position the company to return to an EBITDA margin of 2-4 percent in FY24.

“While many of our customers consider beauty products part of their daily routine, revenue and margins in H1FY23 were impacted by increased promotional activity and inflationary cost pressures,” said Morton. “In my first seven weeks in the role, we have commenced work on additional cost management and margin optimisation programs with new initiatives to be implemented later in H2. We expect to see the full impact of these in FY24.

“Despite challenging trading conditions, we remain optimistic about Adore Beauty’s growth opportunities. Our loyal returning customers, growing brand awareness, and scaling strategic initiatives ensure we are well placed to take advantage of the long-term structural shift to ecommerce. We also see additional strategic opportunities for the business.”

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