Guess which small cap ASX stock hit a 52-week high amid stellar half-year growth

This online retailer had a strong first half.

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The Adore Beauty Group Ltd (ASX: ABY) share price started the week strongly.

The online beauty retailer's shares hit a 52-week high of $1.46 before ending the day 4% higher at $1.34.

This follows the release of the small cap ASX stock's half-year results.

Small cap ASX stock hits 52-week high on results release

  • Revenue up 7% to $100.7 million
  • Active customers up 0.5% to 804,000
  • Record returning customers of 507,000
  • Reported EBITDA up 6x to $2.8 million
  • Cash balance of $32.3 million

What happened during the half?

For the six months ended 31 December, Adore Beauty reported a 7% increase in revenue to $100.7 million. This was supported by a modest increase in active customers and record average order values and annual spend per customer.

Adore Beauty's reported EBITDA came in 6x higher than last year at $2.4 million with a margin of 2.3% (up from of 0.4%). This is in line with guidance and reflects revenue growth, cost optimisation, and re-investment in margin expansion initiatives.

At the end of the period, the small cap ASX stock had a cash balance $30.1 million and no debt.

Management commentary

Adore Beauty's new CEO, Tamalin Morton, said:

Adore Beauty continues to navigate the post-lockdown environment and is cycling periods of significant growth. Year-on-year revenue comparisons remain volatile given the vastly different trading conditions in the prior period, when many of our customers were experiencing lockdown.

Encouragingly, we now have a record number of returning customers, who are contributing 78% of all revenue with larger basket sizes and more frequent orders than new customers. And we're starting to see the early benefits of our strategic initiatives, which are designed to drive improvements in key customer metrics and support sustainable long-term growth.

Outlook

Management notes that trading conditions remain challenging with high levels of inflation and subdued consumer sentiment.

It also notes that January growth comparisons are volatile as the prior corresponding period was impacted by mandated isolation for Omicron, limited travel opportunities, and additional promotional activity.

As a result, trading in the first seven weeks reflects this volatility with revenue down 7.8% on the prior corresponding period.

However, sales through February have shown improvement and are up 3.7% on the same period last year.

Though, it has warned that second half sales are no longer expected to grow in the double digits compared to the second half of FY 2023. Instead, they are expected to be flat as the small cap ASX stock focuses on margins and remaining profitable.

Adore Beauty shares are up 30% over the last 12 months.

Motley Fool contributor James Mickleboro 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. The Motley Fool Australia has recommended Adore Beauty Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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