These guys / girls can’t seem to take a trick reporting a very solid result this morning, the first of their listed life on a day where high value growth was on the nose.
For those not familiar with Adore, they are the largest pure play online retailer of beauty products in Australia having listed in October last year, and todays 1H21 result was above both January 2021 guidance for a 7% increase in revenue against Prospectus (achieved 8%) and a very strong beat at the EBITDA line (+58% on Prospectus forecast). This time last year they sold $52m worth of products for the half while this year they’ve delivered half year sales of $96.2m, i.e. big growth. When they recently upgraded revenue forecasts the market became concerned about margins i.e. discount to grow the top line however that wasn’t the case. Impressively, particularly for those worried about the competitive landscape and level of discounting, margins expanded which drove a big beat at the EBITDA line. This highlights the significant operational leverage in the company and is the reason why we continue to like it. (operational leverage broadly means that as the top line grows, other metrics improve like margins which has a bigger impact on earnings).
That said, I was very unimpressed with the company earnings call today, almost a robotic effort by the CEO – needs to get better at talking (not reading) the business and that I’m sure (hope) will come in time.
MM remains bullish ABY.
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