Adore Beauty knocks back takeover offer; Dusk reports sales dip

Shares in online cosmetics retailer Adore Beauty shot up 20 per cent after it confirmed a takeover approach, while homewares seller Dusk faces a critical six-weeks trading period.

Shares in online cosmetics retailer Adore Beauty shot up 20 per cent after it confirmed it a takeover approach from British e-commerce retailer THG.

However, it came as Adore and candles and fragrances seller Dusk became the latest retailers to report flat or diving sales in the face of a consumer spending strike.

A string of retailers have already warned of worsening sales and shoppers pulling back on purchasing, with companies such as Myer, the nation’s largest footwear retailer Accent Group, Country Road, Culture Kings, homewares chain Adairs and City Chic updating the market to report negative sales growth.

On Monday, Adore revealed a conditional and indicative proposal from British company THG priced at $1.25 to 1.30 cash per share. Adore has rejected the offer.

It was a far cry from the launch of its $270m sharemarket float in 2020 when the hyped-up private equity-backed IPO sold shares to the public at $6.75 each and the company enjoyed roaring sales through Covid-19 lockdowns.

Since then Adore, co-founded by Kate Morris, has seen its share price slide by almost 90 per cent as its sales growth has slowed and the company struggled to retain the excitement and shopper engagement it experienced in its early stages as an online beauty retailer.

The takeover valued Adore Beauty at as much as $122m against the IPO of $270m only three years ago.

Adore held its annual general meeting on Monday and took the opportunity to update the market on its recent trading as well as make a statement on the takeover proposal from THG.

Adore Beauty said the proposal was subject to various conditions including due diligence. It has rejected the offer.

“Following a review of the terms of the proposal with the assistance of its financial and legal advisers, the board of Adore Beauty concluded that the proposal undervalued the company, was unable to be implemented, and was not in the best interests of shareholders.

“For these reasons, the board rejected the proposal.”

Candles and homewares retailer Dusk faces a critical six weeks of trading.

Shares in Adore rose more than 20 per cent and later closed at $1.115, up 19.25 per cent.

At the AGM, Adore said sales momentum had continued with first quarter revenue of $47.5m up 4.7 per cent on the previous corresponding period. Active customers returned to growth, up 1.5 per cent to 803,000.

The company said it was on track to achieve EBITDA margin of 2-4 per cent in fiscal 2024.

Meanwhile, candles and homewares retailer Dusk provided a trading update at its annual general meeting, saying that sales for the first 20 weeks of fiscal 2024 were down 11.3 per cent on the previous corresponding period, with bricks and mortar sales down 12.3 per cent and online sales up 8 per cent.

Dusk chief executive Vlad Yakubson told shareholders in his CEO address that given the seasonality of its business, trading over the next six weeks would be critical to its 2024 results.

“We will continue to focus on disciplined promotional activity and price point management to maximise gross margin dollars. Cost management and maintaining outstanding customer service to maximise sales and basket size also remains a priority,” he said.

Earlier this year, Dusk blamed a softer consumer environment driven by rising interest rates and the cost of living, coupled with disappointing Mother’s Day sales for extinguishing its earnings momentum.

Dusk warned at the time it expected its 2023 earnings to be as much as 40 per cent below the previous year. That earnings downgrade and revelations of a poor recent trading performance caused shares to plummet by almost 20 per cent.

Shares in Dusk rose slightly on Monday and are down 54 per cent over the last 12 months.