The online beauty products retailer rallied yesterday and shares are now more than double the June lows despite CEO Tennealle O’Shannessy announcing her resignation last week (moving to IDP Education). The stock added to the rally yesterday, jumping 30% on the back of a strong result from eCommerce peer Temple & Webster (TPW). While not playing in the same products, there are plenty of similarities between the two. Adore hasn’t provided a 4th quarter update, so drawing on the 9 months to March, the market expects final quarter revenue of $46m to hit the $201.8m expected. EBITDA margins for the half year were 3.3%, and the company has guided to 2-4%. The market sits at the lower end of the range, around 2.5%, however, Temple & Webster proved margin expansion is possible again, printing 3.8% and at the top of their guidance range. Adore has been working on improving margins, particularly through a focus on private label products which it launched late in the year. We suspect that margin expectations are conservative at the moment, so a strong result will rely on sales when they report on the 29th of August. We believe a new CEO is a good thing for ABY which has clearly struggled since its listing.
MM is bullish ABY
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