Adore Beauty shares dive over active customer number concerns

Update (9.57am AEST, Friday 7 May): Following yesterday's share price crash Adore Beauty (ASX: ABY) has issued a clarification about its active customer numbers, claiming this differs between a nine-month and a 12-month period.

The company says the number of active customers in its half year report was for a 12 month period ended 31 December 2020. 

However, in yesterday's Q3 report, the number of active customers was reflective of a nine month period, rather than a 12 month period, meaning the two reports are not comparable. 

"The relevant PCP comparison is 406,000 active customers over the nine months to 31 March 2020," says ABY.

"Therefore, there was a 69 per cent increase when comparing nine months to 31 March 2021, with the same nine-month period in the previous financial year."

The clarification comes after significant damage was done to ABY's share price yesterday; the stock closed down 19.12 per cent to $3.70 per share.

In early trade today shares in ABY have opened 6.5 per cent up at $3.94 per share.

It has been just over six months since online cosmetics retailer Adore Beauty landed on the ASX following an IPO described by Wilson Asset Management as "one of the year's hottest", but at today's share price the company's make-up is looking quite smudged.

Following a quarterly trading update posted this morning, shares in Adore have hit a record low of $3.85, down more than 15 per cent.

Evidently, investors are making their disappointment heard loud and clear on the news that customer numbers are shrinking.

The report shows active customers numbers were at 687,000 at the end of Q3. While that is 69 per cent up on the prior corresponding period, it is 90,000 online shoppers less than figures provided four months ago in the group's half yearly report.

The Melbourne-based company's share price has never managed to return to what it was when ABY made its ASX debut in October. On the day of listing shares spiked to hit a closing price of around $7 - still above the IPO price of $6.75 per share.

With today's stock market movements, shareholders are clearly expecting more from the e-commerce player, especially in an environment that's favourable to online sales.

ABY's latest trading update tells a different tale, one of a company embracing a "structural shift" in consumer behaviour with Adore notching revenue growth of 47 per cent in the quarter.

"The business is making strong progress on our strategy to leverage our online market leadership to further capture market share in a large and growing market," Adore Beauty CEO Tennealle O'Shannessy said.

"We continue to make disciplined investments in our mobile app, loyalty program, content capabilities, range and adjacency expansion opportunities and private label development."

ABY also revealed today it expects to achieve full year FY21 revenue growth in the range of 43-47 per cent, compared to pre-COVID revenue growth of 38.6 per cent in FY19.

Shares in ABY are down 15.94 per cent to $3.85 per share at 1.56pm AEST.

Business News Australia