Adore Beauty revenue of $96.2m was 8 per cent ahead of prospectus forecasts.
Adore Beauty revenue of $96.2m was 8 per cent ahead of prospectus forecasts.

Adore Beauty looking good in lockdown

A growing legion of consumers see a beauty regime as self care, boosting sales of skincare products, manicure kits and hair dyes through the Covid-19 pandemic last year and accelerating into 2021, helping Adore Beauty smash its prospectus forecasts.

In the December half, scented candles proved a huge hit through months of lockdown, too.

Adore Beauty in October raised $269.5m for its sharemarket float and on Tuesday, posted its first-half results showing revenue of $96.2m, 8 per cent ahead of prospectus forecasts and up 85 per cent on the previous corresponding period.

Net profit rose 180 per cent to $2.536m, while EBITDA of $5.2m was 58 per cent ahead of prospectus forecasts.

Beauty products proved a huge hit for shoppers in the six months to Christmas, as well as a popular choice for the sales promotions in November of Black Friday and Cyber Monday. In December, propelled by the November promotional sales, Adore Beauty upgraded its prospectus forecasts to revenue of $92.5m for the first half, exceeding the prospectus revenue target by 7 per cent.

Adore Beauty chief executive Tennealle O'Shannessy told The Australian the online retailer continued to trade strongly in skincare, its largest category, while other beauty and personal care products sold briskly in the first half and the retailer on track to deliver full-year revenue growth above pre-Covid levels as consumers also continued to shift to online purchasing.

"Across lockdown, and it varied in the different stages of lockdown, so when we first went into lockdown and there was a focus on health and safety obviously we saw strong growth in categories like hand sanitiser," she said.

"We then moved into a period where we saw a trend which was an acceleration of a trend we have seen already which is thinking about beauty as 'self care'.

"So female consumers were really looking to nourish themselves and look after themselves, so we saw strong growth in categories like do-it-yourself tools such as manicure kits, hair dye kits as well as things that improved their surroundings. For example in Victoria during lockdown the sale of scented candles went up - women were saying if I have to be locked down at least I will be locked down in a house that smells nice."

Adore Beauty booked a record first half for 2021 with multiple record trading days including Afterpay Day in August and Cyber Weekend in November, with the added bonus of its suppliers funding 100 per cent of the promotions offered across the sales which helped bolster profit margins.

Adore Beauty was founded in 2000 by Kate Morris and James Height and has grown to become Australia's No 1 pureplay online beauty retailer. In October the founders took out $92m from the float, with private equity firm Quadrant also making a handy profit as it sold down to 32.5 per cent. Ms Morris and Mr Height each retain an 11 per cent stake while Quadrant is the largest shareholder.

The shares were sold in the IPO at $6.75 but have failed to trade above that since the float.

Shaw and Partners analyst Danny Younis said impressively, for those worried about the competitive landscape and level of discounting, Adore Beauty's EBITDA surged 58 per cent above the prospectus forecast of $3.3m to $5.2m and highlight the significant operating leverage in the company.

"Strong all round result from Adore Beauty, especially at the earnings and returns lines. 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."

Originally published as Adore Beauty looking good in lockdown



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