The Adore Beauty Group Ltd (ASX: ABY) share price has multiple factors that could make it a useful ASX share to consider.
Adore Beauty was Australia's first beauty-focused e-commerce website. It's now the market leader with more than 10,000 products on sale from 260 brands.
Operates in a large and rapidly growing market
The ASX share points out that it has a large and growing addressable market to look at in Australia. The beauty and personal care market in this country is worth $11.2 billion.
Compared to other countries, Australia is in the early adoption part of the process, with online sales currently representing 11.4% of the total sales at $1.3 billion.
While the beauty and personal care category is growing at a compound annual growth rate (CAGR) of 3.8%, online growth is growing at a much faster pace. The forecast CAGR for online growth is 26% between now and 2024. Within the online segment of the market, Adore has a 13% market share and boasts of a long history of growing faster than the market.
Adore Beauty has strong tailwinds behind it, with the accelerated shift to digital and convenience channels, as well as the positive of more consumers like 'millennials' and younger cohorts now entering the market.
Globally, accelerated growth is occurring in segments where Adore Beauty is "particularly strong", such as skincare, which is the company's largest category.
Heavily pursuing expansion
The e-commerce ASX share is doing everything it can to grow the business, which could also enable the best performance of the Adore Beauty share price.
It wants to have the best offering for customers. Adore Beauty offers a brand portfolio that is not normally found from a single retailer, including prestige department store brands, professional salon and clinic brands, niche brands and masstige.
The company aims to provide a best in class online customer experience that results in loyal, returning customers. In the first quarter of FY22, the company boasted of strong customer retention with returning customer growth of 63% year on year.
Adore Beauty has also been working on a data-driven personalisation and content engagement strategy that educates and entertains customers, making it the first place that customers want to look.
The online beauty business has been expanding its media network of podcasts, videos and blog posts. This year it launched three new podcasts and has three of the top 10 podcasts in the Australian fashion and beauty category.
Adore Beauty expects to maintain an earnings before interest, tax, depreciation and amortisation (EBITDA) margin of between 2% to 4% in the short to medium-term whilst re-investing for growth.
Over the longer-term, it's expecting scale benefits to increase operating leverage and deliver more EBITDA margin growth.
Rapid revenue growth
The above initiatives and strategies are helping the ASX share grow its sales really quickly.
In FY21 the revenue increased by 48% to $179.3 million, with a 39% increase in active customers to 818,000.
This growth has continued into the first quarter of FY22, with revenue rising by 25% to $63.8 million.
This revenue growth can help the bottom line and Adore Beauty share price over time.