The Adore Beauty Group Ltd (ASX: ABY) share price is rising 5% after the online beauty retailer posted its full-year FY23 results.
The Adore Beauty share price is currently $1.05.
Meantime, S&P/ASX 200 Index (ASX: XJO) shares are up 0.23% as earnings season continues.
Let's look into the details.
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Adore Beauty share price up despite lower earnings
Here are the highlights of FY23:
- Revenue of $180.6 million, down 9.6% on FY22
- Gross profit margin of 32.8%, down from 33.3% in FY22
- Reported earnings before interest, taxes, depreciation, and amortisation (EBITDA) of $600,000, down from $5.3 million in FY22
- EBITDA margin of 0.4%, down from 2.7% in FY22
- Strong cash balance of $27.8 million with no debt
What else happened in FY23?
Adore Beauty said its lower EBITDA margin reflected lower operating leverage, cost inflation, and re-investment in key initiatives.
The retailer's active customer numbers fell to 801,000 in FY23, down 8% on FY22. However, the returning customer base grew by 4% to a record high of 490,000.
The company said it was seeing early benefits of its cost and margin optimisation programs with improvements in gross profit margin, marketing efficiencies, and employee costs in 2H FY23.
The company's mobile app accounted for a quarter of all revenue in Q4 FY23. The target is 30%.
Average order values and frequency of orders are higher via the app than via the website.
What did Adore Beauty management say?
CEO Tamalin Morton said:
Adore Beauty returned to growth in the second half despite challenging trading conditions, demonstrating our compelling customer value proposition and the underlying strength of our business.
Our almost 500,000 returning customers continue to grow year-on-year, contributing 76% of all revenue in FY23 and driving record average order values.
What's next for Adore Beauty?
Adore Beauty said challenging retail conditions were expected to continue. This is largely due to high interest rates and inflation impacting the economy.
The company said it was seeing good sales momentum into FY24 though, with year-to-date revenue up 5.9% on the same period in FY22.
The company said:
In FY24, Adore Beauty will leverage its strong balance sheet to phase investment in key strategic
initiatives. These initiatives, combined with the increased impact of cost and margin optimisation
programs, are expected to increase operating leverage, and deliver EBITDA margin expansion.
Adore Beauty is targeting an EBITDA margin of 2% to 4% in FY24.
Adore Beauty share price snapshot
The Adore Beauty share price is up 2% in the year to date and down 39% over the past 12 months.
