Why the Adore Beauty (ASX:ABY) share price is rebounding 7% today

The Adore Beauty Group Ltd (ASX:ABY) share price is rebounding on Friday after crashing 19% lower on Thursday. Here’s why…

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The Adore Beauty Group Ltd (ASX: ABY) share price is rebounding on Friday morning.

In early trade, the online beauty retailer’s shares are up over 7% to $3.98.

This follows a 19% decline by the Adore Beauty share price on Thursday.

Why did the Adore Beauty share price crash lower yesterday?

The Adore Beauty share price was sold off yesterday following the release of a third quarter update.

Although the ecommerce company revealed that it expects to report revenue growth of 43% to 47% in FY 2021, this fell a touch short of expectations.

Also weighing particularly heavily on its shares was commentary around its active customers. Adore Beauty revealed that active customers at the end of the third quarter were 687,000.

While this is a 69% increase on the prior corresponding period, it is down from 777,000 active customers at the end of the first half.

However, this metric is slightly misleading and the company has sought to add more colour to it this morning.

What did Adore Beauty say?

This morning Adore Beauty clarified that the 687,000 active customers at the end of the third quarter was reflective of a nine-month period, rather than a 12-month period. Hence the discrepancy between these numbers and those reported with its half year results.

It explained: “As stated in the Trading Update dated 6 May 2021, Adore Beauty had 687,000 active customers at the end of Q3 FY21. This number is reflective of a 9 month period, rather than a 12 month period. The relevant PCP comparison is 406,000 active customers over the 9 months to 31 March 2020. Therefore, there was a 69% increase when comparing 9 months to 31 March 2021, with the same nine-month period in the previous financial year.”

However, what does remain unclear, is why the Adore Beauty decided to represent its numbers in this way.

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James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. recommends Adore Beauty Group Limited. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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