On Tuesday, Adore reported its inaugural interim profit result, revealing it was set to smash its full-year sales and earnings forecasts after just a few months as a publicly listed company.
Sales for the six months to the end of December rose 85 per cent to $96.2 million, beating the company’s prospectus forecasts by 8 per cent and Adore’s own forecast in December. Net profit after tax more than tripled off a low base to $3.1 million, and earnings before interest, tax, depreciation and amortisation (EBITDA) came in well ahead of prospectus forecasts at $5.2 million.
However, various costs associated with the retailer’s IPO, along with share-based payments to staff members, hurt the company’s bottom line, with Adore’s statutory EBITDA falling to a $760,000 loss.
Adore was founded by now-chairman Kate Morris in her garage in Melbourne more than 20 years ago when e-commerce was a foreign concept to most shoppers. The makeup and skincare seller listed on the ASX in late October and was a popular float, attracting significant interest from retail and institutional investors. However, its shares quickly fell below its $6.75 listing price.
On Tuesday, shares rose sharply after the market opened but then dropped 2.5 per cent to $5.56 despite broader gains on the bourse. Adore told investors while trading through January had been robust, new customer growth would start to slow as the COVID boom wore off.
Ms O’Shannessy said while Adore’s record half was driven by its 82 per cent jump in new customers, she was confident the business would be able to convert many of them into returning customers across the remainder of the financial year and into the future.
“Beauty is a high-frequency purchase category so customers come back and repurchase a lot, so our returning customer cohort represents 64 per cent of our revenue,” she said.
“We welcomed almost half a million new customers this year and these are transitioning into returning customers, not just in the second half but over many years.”
Shaw and Partners analyst Danny Younis said it was a strong all-round result from Adore, which he said was “doing everything right” to keep attracting new shoppers.
“Adore Beauty is ideally positioned for long-term growth, with a very attractive and large addressable market, which is very fragmented, thereby enabling the company to garner further market share (already the category leader) and to pursue and drive scale,” he said.
“Furthermore, the company is now recapitalised for growth, has no debt, management expertise is high and the risk/reward equation compelling.”
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Dominic Powell writes about the retail industry for the Sydney Morning Herald and The Age.