The Adore Beauty Group Ltd (ASX: ABY) share price is rising after revealing a strong start to FY22 in the first quarter.
Adore Beauty’s FY22 Q1
The beauty online retailer revealed that revenue increased by 25% to $63.8 million in the first quarter.
Total customers rose by 24% year on year to 874,000. But there was strong customer retention with returning customer growth of 63% to 418,000.
Adore Beauty also pointed out that it’s well funded with no debt. That gives it good flexibility to continue investing to grow the business.
In terms of what the business has been focusing on, the ASX share said it is executing “strongly” on its strategic initiatives, by scaling its mobile app, building owned marketing channels and community, and expanding its loyalty program.
During the quarter, the Beauty IQ passed three million downloads. The ‘Bite-Sized Beauty’ podcast was launched and multiple sold-out virtual loyalty events were hosted. The company’s first private label brand is on track to launch in the third quarter of FY22.
Private label brands own come with better margins and stronger stock certainty for businesses.
Is the future still bright for the ASX share?
The company said it continues to benefit from the ongoing shift to online, which has been further accelerated by the recent COVID-19 lockdowns.
Adore Beauty CEO Tennealle O’Shannessy said: “Over the last 12 months our loyal returning customers grew 63%, providing a strong foundation for future growth. Our returning customers become more valuable each year they spend on the platform, increasing their basket size and order frequency over time.
“We continue to leverage our content strategy to drive brand awareness and discovery, and we are reinvesting in the business to accelerate our growth trajectory within a large and growing $11 billion market. It has been a pleasing start to FY22 and we look forward to continuing to execute on the exciting initiatives that will see Adore Cement our online market leadership in the beauty category.”
Summary thoughts on Adore Beauty and the share price
Adore Beauty is doing very well at capturing the opportunity it’s presented with at the moment. Ongoing double digit revenue growth is going to help the business achieve strong scale benefits in the coming months and years.
I think it could be a solid long-term idea at the current level. It’s one of the ASX growth shares on my watchlist.
