Adore Beauty Group Limited (ASX: ABY) has outlined a bold three-year strategic plan aimed at transforming the company into a leading omni-channel beauty retailer. The strategy targets 30% revenue growth and a doubling of EBIT margin, signaling a significant evolution from its origins as a pureplay online beauty platform.
Key Highlights of the Strategy:
1. National Retail Footprint:
- Target: Establish 25+ physical stores across Australia over three years.
- Leverages Adore Beauty’s brand strength and infrastructure to expand customer acquisition and broaden its addressable market.
- iKOU, an owned brand, will expand from 3 to 10 stores, particularly in premium metro and regional areas.
2. Growth of Owned Brands:
- Focus on increasing revenue from owned brands to 8-10% of total product sales.
- Expansion through direct-to-consumer channels, retail, and wholesale partnerships in new geographic regions.
3. Enhanced Operational Efficiencies:
- Adoption of AI and data-driven operations to improve efficiency.
- Optimization of inventory to achieve working capital gains.
4. Retail Media Capability:
- Investment in retail media to drive margin expansion and boost profitability.
- Enhanced focus on mobile app adoption, subscriptions, loyalty programs, and customer retention.
Key Performance Targets by FY27:
- Revenue: Exceed $260 million, representing 30% growth on FY24.
- Gross Margin Expansion: Over 200 basis points.
- EBITDA Margin: Above 8%; EBIT Margin above 5%.
- Customer Growth: 1.25+ million active annual customers.
- Owned Brand Contribution: 8-10% of product revenue.
CEO Commentary:
Sacha Laing, CEO of Adore Beauty, emphasized the company’s readiness for its next phase of growth:
“Adore Beauty has strong foundations poised for material growth. Transitioning into an omni-channel beauty authority is the natural evolution for the Group. This strategy represents a step change in customer acquisition, revenue, and profitability, setting us up to capture a larger share of the $13.9 billion beauty market.”
Strategic Evolution:
Adore Beauty’s move to an omni-channel model marks a significant shift, combining the strength of its online presence with physical stores. This hybrid approach is designed to enhance customer engagement, increase brand advocacy, and drive long-term value creation for shareholders.
Industry Context:
With Australia’s beauty market projected to grow to $13.9 billion, Adore Beauty is positioning itself to capitalize on the shift toward omni-channel retail, catering to evolving consumer preferences for both online and in-store shopping experiences.
This comprehensive strategy underscores the company’s commitment to maintaining its position as a market leader while delivering sustainable growth.
