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Adore Beauty (ASX:ABY) share price in focus with good start to FY24

The Adore Beauty Group Ltd (ASX: ABY) share price is in focus after the online retailer gave a trading update.

Adore Beauty runs an e-commerce website, selling over 12,000 products from 270 brands.

Adore Beauty share price

Adore Beauty’s trading update

In the first three months of FY24, revenue had grown 4.7% year on year to $47.5 million.

The number of active customers also increased, growing by 1.5% to 803,000. It also talked about a record number of returning customers, which rose 4.7% to 497,000.

Adore Beauty said that it executed on a refined strategy with a newly launched subscription service. Its ‘subscribe and save’ is available across 18 brands, with automated six-to-12-week replenishment – additional partner brands will be added over time.

The mobile app now represents more than 26% of all revenue. This was an increase of 1.9 percentage points from June 2023.

The ASX share also talked of new partner brands being added, such as Nyx, Davines, Ralph Lauren, Viktor & Rolf and Mugler. The e-commerce company said that its private label brands “continue to grow”.

Adore Beauty also said that it’s on track to achieve an EBITDA margin (EBITDA explained) of between 2% to 4%.

Management commentary

TheĀ Adore Beauty CEO Tamalin MortonĀ said:

While trading conditions remain challenging, Adore Beauty has had a solid start to FY24, with both revenue and active customers up on the same period last year.

Encouragingly, active customer numbers have now returned to growth, and we continue to see positive momentum with a comprehensive offering that provides real value-added benefits.

We continue to prioritise customer experience and convenience, augmenting our offering to now include a subscription service across popular brands.

Our ā€˜Subscribe and Saveā€™ offer ensures customers receive their frequently used products at the right time and best price. The offer has been designed to reduce friction for customers, support loyalty and retention, and improve average order frequency.

Final thoughts on the Adore Beauty share price

I think the business has done well at turning things around back to growth. It’s not a lot of growth, but it’s headed in the right direction.

Adore Beauty already has built the digital infrastructure, so more revenue going through its website should help with profit margins.

I believe Adore Beauty has the potential to do very well over the long-term. The growth of its own brands, and the subscription service, seem like smart moves.

It’s one of the ASX growth shares I’d put on the watchlist because of how beaten-up it is over the last few years.

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