Consumer cyclical beauty company Adore Beauty Group [ASX:ABY] was this morning talking revenue, customers, orders, and exiting directors in its latest company update.
The online beauty retailer posted a 3.3% decline in revenue, even off the back of the Omicron COVID virus impacts, which had weighed heavily on the prior corresponding period.
Active customers had also dropped 3% on the past two-year basis, and by 10% on the prior period, showing signs of slowing demand.
ABY was clocking slightly downwards in shares mere hours after the ASX release, trading for around $1 at the time of writing.
It may have moved up 17% in the last month, but in the past 12 months, ABY dropped nearly 40%:
Source: Market Index
Adore’s quarter sales and customer numbers decline
As a group that describes itself as ‘Australia’s number one pureplay online beauty retailer’, Adore may not have been expecting such results for the third quarter of fiscal 2023, with business officially returning to normal for many companies.
For the past three months, the group reported revenue of $41.3 million had decreased by 3.3%, though up 4.9% over the past two years, the market had remained challenging post COVID-19.
This was even with year-on-year comparisons made between the prior trade period and considering the high levels of Omicron impacts and mandated isolation.
Adore said that the reported revenue was supported by ‘a record Afterpay Day sales event’, suggesting, if it weren’t for this promotion, that the revenue reflected in the current report could have been much lower.
Active customers were also down 10% on the prior period with 793,000 counted, and 3% down on a two-year basis. The group worked though one-year reflective churn and put the lower numbers down to slowing demand for products.
It should also be mentioned that being an online business, the group will be comparing higher results from online shopping highs gained in the pandemic.
Cutting to the group’s returning customers, however, the group said these numbers had grown by 6% from the last period and had risen a whopping 56% on the two-year basis.
Adore’s returning customers are known as the largest drivers of revenue, shown particularly in the contribution of 64% of all sales in the quarter.
In other news, Adore has expanded its owned brand portfolio by launching a new sunscreen from its AB Lab brand.
Adore is also adding to product categories, which included the onboarding of Kin Fertility and Love Luna underwear in Q3.
Commenting on the results, CEO Tamalin Morton said:
‘Adore Beauty’s revenue improved as the quarter progressed, benefitting from a record Afterpay Day.
‘Adore Beauty is well-positioned to navigate evolving consumer trends and challenging retail conditions given cost-of-living pressures and interest rate increases, offering an extensive range that spans masstige through to luxury brands and price points to suit all budgets. Separately, cost optimisation initiatives are being implemented and we are working through our longer-term strategy.
‘Adore Beauty’s long-term outlook looks promising.’
Also in other news, Adore announced that founders and executive directors Kate Morris and James Height plan to transition out of their part-time executive roles at the end of FY23.
However, they will stick with the company by serving as non-executive directors of the group’s board.
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Regards,
Mahlia Stewart
For Money Morning
