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STOCK WATCH: Temple & Webster tanks, Adore and Redbubble lift

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By Published On: November 15, 20220 Comments

Temple & Webster has brought the ASX Listed E-Com Index down in the last fortnight, salvaged by Adore and Redbubble's share price growth.

After its AGM presentation and address, the Adore Beauty share price has experienced noticeable uplift, to $1.77 at close on Monday (from $1.71 on Friday). Over the last two weeks, it has experienced 18% growth, reflecting a possible change of heart where investors are concerned.

Q1 revenue of $54.4 million is 29% down on the prior corresponding period (which was noticeably a lockdown period) but up on the two most recent quarters. Chairman Marina Go told the company’s annual general meeting yesterday that its board believes the share price doesn’t reflect the business’ performance or market opportunity. Adore also noted ‘strong growth’ in returning customers (up 14% on PCP and 85% on a 2-year period) and that it expects to return to double-digit revenue growth in the second half and to remain profitable as it finishes cycling COVID lockdown growth.

Adore ‘reaffirms that it expects to remain profitable on a full-year basis in FY23 and expects to return to a 2-4% EBITDA margin range for the full year in FY24’. It further said that its ‘strong balance sheet’ provides flexibility to execute growth strategy and pursue opportunities.

It also noted that its first owned brand, Viviology, ‘continues to outperform internal expectations’. Adore’s owned brands strategy has been previously been flagged by the company as a huge element of margin expansion. Indeed, it now says owned brands will contribute 10% of revenue at gross margin target of 80% (with its mobile too to contribute up to 30% of revenue) by FY27. Its EBITDA target for FY27 is 8% to 10% with longer term EBITDA growth at 10%+.

While it certainly has its work cut out for it, Adore isn’t shying away from the challenges it faces as it heads to a ‘normalised operating environment’.

Source: ASX Listed E-Com Index based on ASX reporting for the period

Meanwhile, Temple & Webster shares have tanked, dropping 20.9% over the last fortnight to $4.43. It can’t be attributed to general investor sentiment, given other pureplay retailers have experienced an uplift in recent times. Redbubble, for example, is up 20.4% over the last 14 days. While there were concerns about its board and a lacklustre update in October (leading to its share price hitting a 2-year low), there seems to be a more promising trajectory for Redbubble in November.

Other companies on the ASX Listed E-Commerce Index have had a less volatile few weeks, with Kogan up 1.8% in the last fortnight, Cettire up 4.6% and even Booktopia up 2.4% in the same period. Kogan has been almost eerily stable in recent times (closing at $3.35 on Monday), while Cettire and Booktopia’s recent share price ($1.70 and $0.21 respectively) seems to be a levelling out somewhat after recent swings.

At 0% growth, Bike Exchange closed at $0.018 on Monday. On Friday it experienced some uplift (which was short-lived) after announcing that it issued 151,310,975 fully paid ordinary shares, raising $2,430,974 (before costs). Its Share Purchase Plan timetable has been revised (which it says is due to the mailing and despatch delay of the SPP Offer Booklet).

As investors wait to see how all e-com companies perform during peak season (and indeed finish cycling COVID lockdown growth), the next few months are sure to be interesting. The E-Com Index (down 5.1% over 14 days) is severely underperforming compared to the ASX200 (which is up 4.1% in the same period).

Figures are current as at close of ASX on 14 November 2022. This is analysis only and not intended as investment advice.

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About the Author: Natasha Scholl

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