Search ASX code:
Generic filters

Is the Adore Beauty (ASX:ABY) share price attractive?

The Adore Beauty Group Ltd (ASX: ABY) share price has been under pressure after listing at an initial offer price of $6.75 in November 2020. Since then, Adore shares have fallen more than 20%, trading at $5.31 at the time of writing.

Could the current Adore Beauty share price represent a buying opportunity?

ABY share price chart

Source: Rask Media ABY share price chart since listing

What does Adore Beauty do?

Adore Beauty is a ‘pure-play’ online retailer that sells third-party beauty and personal care products. According to research and consulting firm Frost and Sulivan, total beauty and personal care product sales in Australia totalled $10.9 billion in 2019, with online sales comprising just 7.3%.

Adore Beauty currently sells more than 11,000 unique products from over 230 global and Australian brands. According to Adore’s prospectus, the group has over 590,000 active customers, growing a mammoth 278% over a four-year period. Adore views its ability to engage with customers as a source of sustainable competitive advantage.

In FY20, Adore earned revenue of $121.1 million, EBITDA of $5 million and net profit after tax (NPAT) of $2.5 million. This represented rapid growth from FY19, when Adore generated pro-forma revenue of $73.2 million, EBITDA of $1.6 million and NPAT of $0.5 million.

FY21 trading update

On 1 December 2020, Adore provided a positive trading update for the first half of FY21.

Adore advised that the November promotional sales period, including Black Friday and Cyber Weekend, surpassed expectations. The group mentioned that the ongoing COVID-19 restrictions in Victoria contributed towards higher sales volumes.

The group accordingly upgraded revenue guidance for the first half of FY21 to circa $95.2 million, representing a 7% increase on the prospectus revenue projection. Adore expects this to contribute towards higher EBITDA in 1H FY21.

Adore Beauty CEO Tennealle O’Shannessy commented: “We are pleased to report strong sales ahead of our Prospectus forecasts. The business has continued to scale, deliver content and meet the needs of our customers at a time when they need it most.”

Adore Beauty will next update the market on the release of its half-year FY21 results in February.

Summary thoughts

Adore Beauty is growing quickly into a large addressable market, which should continue to benefit from the shift from in-store sales to online sales. With increased scale, incremental revenue should translate to materially higher profits over time.

As the Adore beauty share price is trading at a notable discount to the initial offer price, and given that the company has upgraded guidance, this could represent a buying opportunity. However, it may be prudent to wait until 1H FY21 results are released.

Click here for more ASX growth share ideas.

1 ASX Stock to Buy RIGHT NOW...

Our top analyst has just identified his #1 'MedTech' stock idea for 2021 and beyond.

Click here or enter your email address below to access the stock code, 3,500-word analysis and founder interview. Our top expert's free investment reports are exactly that -- completely free! No gimmicks, just expert-proofed stock research and more.

Enter your email below to receive his free report.

Unsubscribe anytime. Read our TermsFinancial Services GuidePrivacy Policy. We’ll never sell your email address. Our company is Australian owned.

1 ASX Stock to Buy RIGHT NOW...

Our top analyst has just identified his #1 'MedTech' stock idea for 2021 and beyond.

Click here to access the stock code, 3,500-word analysis and founder interview. Our top expert's investment reports are completely free with a Rask Australia account. No gimmicks, just free stock research and more. Click here now to get the report.

At the time of publishing, the author of this article does not have a financial or commercial interest in any of the companies mentioned.

Information warning: The information on this website is published by The Rask Group Pty Ltd (ABN: 36 622 810 995) is limited to factual information or (at most) general financial advice only. That means, the information and advice does not take into account your objectives, financial situation or needs. It is not specific to you, your needs, goals or objectives. Because of that, you should consider if the advice is appropriate to you and your needs, before acting on the information. If you don’t know what your needs are, you should consult a trusted and licensed financial adviser who can provide you with personal financial product advice. In addition, you should obtain and read the product disclosure statement (PDS) before making a decision to acquire a financial product. Please read our Terms and Conditions and Financial Services Guide before using this website. The Rask Group Pty Ltd is a Corporate Authorised Representative (#1280930) of AFSL #383169.

Keep reading: