ABY - Adore Beauty Group

[System]

Adore Beauty was co-founded in 2000 by Kate Morris and James Height as Australia’s first beauty focused e-commerce website. Since then, it has become Australia’s number one pureplay online beauty retailer, home to over 230 global and domestic brands and 11,000 products – some of which are available exclusively on Adore Beauty’s platform. In 2019, Quadrant Growth Fund invested in Adore Beauty alongside the co-founders.

Adore Beauty generates revenue through the sale of beauty and personal care products online. Adore Beauty has attracted and retained a large and active customer base, having grown over 278% over the past four years to over 590,000 Active Customers today. Adore Beauty’s customer acquisition and retention capabilities are driven by its business model that creates a strong value proposition for both brands and customers through its integrated content, marketing and e-commerce offering.

The Board believes that the Company’s ability to engage with customers and its reputation as an online destination for beauty and personal care represents a sustainable source of competitive advantage, and expects this to drive continued growth in active customers and revenue. In FY20, the Company generated $121.1 million of revenue.

It is anticipated that ABY will list on the ASX during October 2020.

Investor Centre | Adore Beauty Group

www.adorebeautygroup.com.au

 

[Dona Ferentes]

Now out presenting to investors.

When questioned as to the good performance during Covid, co founder and CEO Kate Morris' response was that Adore’s sales are mainly concentrated on skincare and haircare, and less on cosmetics.

‘‘We are not doing it just to look fashionable – we are doing it because it feels good,’’ she says.

Adore, which starts trading on the ASX on October 23, earned revenue of $121 million in the year to June 30 – a 52 per cent growth rate over the past three years. It made a $2.5 million net profit in 2020.

The core customers are 25- to 45-year-old women. As women get older they buy less makeup and more skincare products.

First female-led IPO
The IPO stock is being priced at 3.9 times sales, which is either expensive or cheap depending on what stock you compare it with.

It is a hard one for potential investors to analyse because most of its competitors are omni-channel players such as Myer, David Jones, Mecca and Sephora.

Analysts believe the company’s total addressable market is about $1.3 billion. They say sales will grow by about 25 per cent a year over the next three years.

Morris says this is the first time there has been a female-led IPO in Australia and she believes there will be many more in the future.

One fund manager, who is not buying the stock, said there were three challenges for Adore: the small total addressable market; the difficulty in judging non-lockdown sales levels relative to normal sales; and a lack of clarity about Adore’s competitive advantage when it is up against Amazon and online competitors such as Strawberrynet.

But other managers interested in the stock have highlighted Adore’s growth strategy and its high customer retention rate. It had 590,000 active users at June.

Its growth plan includes a mobile app later this year, private label products next year, a loyalty program and adjacent products.

Some will be wary of the fact Adore is being sold by a private equity group, Quadrant.

 

[bk1]

What about BWX? maybe not as exposed to the e commerce and onine segments, however..

 

[frugal.rock]

Listing tomorrow.
Will watch with interest.
Priced at 250 x earnings...
Did I hear correctly?

 

[Dona Ferentes]

IPOed today

Adore raised $269.5 million at $6.75 a share, including $40 million in new shares, valuing the company at $615 million.

Company co-founders Kate Morris and James Height will each receive $45.9 million by selling 40 per cent of their shares into the offer.

 

[Dona Ferentes]

The marketing to retail seems to have pulled in a few novices. Neighbours in 'the industry' mentioned they bought some shares on Day One, and CEO Kate Morris had been hitting the Insta and Tweet feeds:


and an article in the AFR, getting really incisive stuff like this:

"I have been a longtime customer and a repeat customer, so when the opportunity came up it seemed like a sound investment," Ms Howarth says. "I wouldn’t invest in a company I wouldn’t be willing to be a customer of."

. I suppose this is marginally more astute than the new femo-whiners

Ms Kane had no doubt about the company she wanted to invest in. However, she found the process of participating in an initial public offering far from simple. "It felt like a complete gauntlet of information and completely obfuscated by jargon," she says. " "I had to lean on my incredibly supportive group of friends, having lengthy chat discussions with high school friends – all women with their own stock [portfolios]."
Controversially, she suspects investing isn't made difficult by accident – instead, she sees it as a likely function of the industry's male dominance. "Like any industry or systemic infrastructure that is set up by men, the stock and finance sector can often feel completely unreachable until it's unveiled in a way an individual can easily comprehend," she says.

The first-time female investors backing Adore Beauty

The most valuable public float of 2020 lured long-time customers and fans to the sharemarket – but they want to see more female-led ASX companies.

www.afr.com

I presume the losses now carried will be blamed on the patriachialists. The 15 minute chart (IPO at $6.75 since listing:

 

[frugal.rock]

Priced at 250 x earnings...
Did I hear correctly?

So what we need is IPO's written in junior school English with popups and story time....
I read the comment as being to lazy to take the time to understand it...

 

[Dona Ferentes]

Only a 30% haircut

Since listing, it’s been all downhill for Adore investors though with shares closing at $4.78 on Thursday nearly 30 per cent below the $6.75 price Quadrant and Adore’s founders Kate Morris and James Height cashed out much of their stakes for.

Quadrant only bought its stake in September 2019 before selling 40 per cent of it at the IPO for $137.2 million, retaining a 32.5 per cent holding. It has agreed not to sell more shares until August 2021 after Adore hands in results where Quadrant will likely hope investors focus more on promotion-fuelled customer acquisition and revenue growth, before the bottom line.
Adore’s two founders now have just 10.8 per cent each left in the business, with their remaining shares escrowed for an undisclosed period of time under the prospectus.

For the six months to December 31 Adore posted a loss before income tax of $1.5 million and it seems the $635.3 million IPO could equally stand for It’s Probably Overvalued.

Am so glad these sorts of things don't make it into my portfolio

 

[Dona Ferentes]

and another 10c drop today

and here's to the critical thinker, who clearly understood the issues when she bought in at IPO.

It felt like a complete gauntlet of information and completely obfuscated by jargon ... I had to lean on my incredibly supportive group of friends, having lengthy chat discussions with high school friends – all women with their own stock [portfolios]. .... Like any industry or systemic infrastructure that is set up by men, the stock and finance sector can often feel completely unreachable until it's unveiled in a way an individual can easily comprehend...

sisterhood is powerful !

 

[Dona Ferentes]

and the decline continues. Down another 15% to below $4; got as low as $3.85

Adore Beauty expects sales to rise as much as 47 per cent this year as the shift to e-commerce gathers pace and new customers who started shopping with the online retailer during the pandemic make follow-up purchases. In a trading update on Thursday, Adore Beauty, which floated last October, said revenue rose 47 per cent to $39.4 million in the March quarter, after surging 85 per cent to $96.2 million in the December-half.

Active customers rose 69 per cent year-on-year to 687,000. However, the number of active customers - those who have made an order in the last 12 months - appears to have fallen from 777,000 at the end of December as customers started returning to bricks and mortar stores for their beauty fix.

as they say, analyst expectations were not met. Or just over-hyped, on fairy tale metrics

 

[peter2]

Like all new "investors" they're getting a market lesson.

It's impossible not to be cynical with all the dodgy IPOs happening this year. The financial markets facilitate rip-offs like this. All responsibility lies with the investors but most of them aren't able to properly analyse a business through all the selling spin.

Paying almost 200 times forecast net 2020 profit.

Didn't buy this "pig in a poke". How's the investment in NXL-Nuix going? AIM? The list is long.

 

[Dona Ferentes]

and managed to 'lose' another 8% today..... Careless . Under $2.50

Adore Beauty has stuck to its guidance for achieving an EBITDA margin of 2 per cent to 4 per cent over the short to medium term while reinvesting to drive above market growth. It has also outlined further margin expansion long term with the benefit of scale.

Adore interim revenue increased 18 per cent to a record $113.1 million and the EBITDA margin came in at 3.3 per cent, within the targeted range. No dividend was declared and net profit was $1.97 million, down from $2.54 million.

The overall positive trading momentum seen in the first half has continued into the second half, with revenue growth over the first six weeks of H2 increasing 14 per cent on PCP

... that is the positive spin result. Reality is it appears marginal, any has been a big loss for early investors. And subsequent ones. And any slippage could be painful. DNH.

 

[dyna]

It's impossible not to be cynical with all the dodgy IPOs happening this year. The financial markets facilitate rip-offs like this

Notable too, that institutional interest in the float was......nil.

 

[Dona Ferentes]

and managed to 'lose' another 8% today..... . Under $2.50

A steady and continuing decline, with Adore plumbing $1.60 this week. I wonder if the latest Q numbers will enthuse anyone? Probably not

March quarter revenue increased 9 per cent to $42.7 million and active customers improved by 7 per cent to 880,000. The company is targeting introducing private label products in the June quarter (fourth quarter of FY 2022).

The e-commerce retailer reported returning customer growth of 47 per cent and derived more than 10 per cent of March quarter revenue from in-app transactions. Returning customers are defined as non-first time customers over a 12-month period

 

[Dona Ferentes]

... drumline .. i mean drumroll

.
Cosmetics retailer Adore Beauty shares surged after its board rejected THG’s cash offer of $1.25 to $1.30 a share.
.
since IPO

there's a 20 per cent surge there today . Somewhere.