The Adore Beauty Group Ltd (ASX: ABY) share price is up more than 4% after a pleasing FY24 update.
Adore Beauty is a leading online retailer of beauty products, with more than 270 brands and over 13,000 products. Its offering has evolved to include integrated content and marketing.
FY24 business update
The ASX e-commerce share revealed that it expects to report annual revenue of $195.7 million, which is up 7.4% on the prior corresponding period. Adore Beauty said that this was a strong result in a challenging retail environment.
Adore Beauty reported that it achieved a record 519,000 returning customers, up 5.8% year on year. The number of active customers increased by 1.6% year on year to 814,000. The company put this down to its “continued focus on customer centricity”.
The ASX retailer said it expects to report an FY24 EBITDA (EBITDA explained) margin between 2.2% to 2.5%. The business has managed to achieve this despite the heavy investing done by the company to deliver growth. Increasing scale can help with profit margins.
Management comments
The Adore Beauty CEO Tamalin Morton said:
Adore Beauty continues to deliver revenue and active customer growth, even as cost-of-living pressures impact consumer sentiment and trading conditions more broadly.
Our solid performance over FY24 has reaffirmed the resilience of both our business and the beauty and personal care category, and we continue to focus on meeting customer needs, while growing both sales and profitability.
iKOU acquisition
The company said it’s on track to complete the acquisition of Australian beauty and wellness brand iKOU on 31 July 2024, which is in line with the announced timeline.
Adore Beauty expects the first iKOU products to be available on platform in August 2024.
This transaction is expected to add to profit / earnings per share (EPS) in FY25.
The company will give another update on this acquisition with the FY24 result.
CEO replacement
Adore Beauty said its recruitment process to appoint a new CEO to replace Tamalin Morton is “progressing well” and is being led an executive search firm, with the board also involved.
Ms Morton will remain as the CEO until September 2024 and will take up a consulting role providing strategic advice to Adore Beauty beyond September 2024.
Final thoughts on the Adore Beauty share price
The Adore Beauty share price is down 30% this year, yet the revenue is at a high level and keeps growing.
If the business is able to grow its profit margins in the coming years as it scales grow, then this ASX share could be one to watch. However, if it needs to keep its margins low to compete, then Adore Beauty may not be as exciting as it seemed during COVID-19. If more shoppers keep shifting to online shopping, then that is a helpful tailwind for the company.
It could be one to watch, but there are other ASX growth shares I’d rather buy first today.
