Adore Beauty share price glows following ‘strong quarterly performance’

Adore Beauty lays down the foundation for growth in the third quarter…

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A smug executive woman wearing glasses and red lipstick blows a kiss to herself as she takes a selfie in a cafe feeling happy about the Adore Beauty share price going up today

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Key points

  • The Adore Beauty share price is up 2.1% to $1.70 following the company's third-quarter update
  • Revenue and customer numbers increased for the cosmetic retailer as the economy continues to reopen
  • The company remains on track to launch its first private label products in Q4

The Adore Beauty Group Ltd (ASX: ABY) share price is charging full steam ahead on Thursday after the company posted its third-quarter update.

In the early hours of trading, shares in the online cosmetics retailer are getting a positive reception. ASX investors have pushed the Adore Beauty share price up 2.1% to $1.70. In earlier trading, it stretched higher to $1.74 — a gain of 4.8% on yesterday’s closing price.

For context, the S&P/ASX 200 Index (ASX: XJO) is enjoying a bounceback of 0.99% today.

Adore Beauty share price sparkles on glamorous quarter

  • Revenue up 9% on prior corresponding period (pcp) to $42.7 million
  • Active customers increased 7% to 880,000
  • Returning customers up 47% compared to pcp
  • On track for private label launch in fourth-quarter FY22
  • Loyalty members contributed more than 60% of total revenue.

What else happened during the quarter?

Adore Beauty shareholders have endured a disastrous past month, with the share price down 20%. A shot of good news from the cosmetics company today is just what they needed, it seems.

Today, Adore revealed a relatively strong quarter as the economy continues to reopen. Booking $42.7 million during the three-month period, the online retailer has now taken its compound annual growth rate (CAGR) to 26%.

Notably, the company witnessed promising signs from its strategic initiatives during the quarter. For example, Adore Beauty’s native app accounted for more than 10% of revenue — strengthening engagement and conversion.

What did management say?

On the back of the solid result, Adore Beauty CEO Tennealle O’Shannessy said:

Adore Beauty has delivered a strong quarterly performance in a reopening environment, a very pleasing outcome given the 47% revenue growth recorded in the PCP, and having to navigate some supply chain pressures during the period. Importantly, our loyalty-focused strategic initiatives are enabling us to convert new customers to loyal, valuable returning customers.

What’s next?

For investors looking to get a clue on what the next quarter might look like, the update provided little insight. However, the company did note it plans to launch its first private label products in the upcoming quarter.

Adore Beauty share price snapshot

As investors have rotated out of consumer discretionary investments, the Adore Beauty share price has suffered. Since the beginning of the year, the shares have lost 59% in value. They hit new all-time lows along the way.

The poor performance has coincided with a reduction in earnings. At the end of 2021, Adore delivered $4.489 million in 12-month trailing profits. A year on and that same metric has reduced to $276,000.

Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has recommended Adore Beauty Group Limited. The Motley Fool Australia has recommended Adore Beauty Group Limited. 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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