Adore Beauty to buy organic skincare brand iKOU in $25m all-cash deal
Online cosmetics retailer Adore Beauty will secure three stores and a revenue boost with the purchase of a growing organic skincare brand.
Online cosmetic retailer Adore Beauty is moving into bricks-and-mortar stores after signing off on a $25m all-cash deal to buy organic skincare brand iKOU.
The Melbourne-based ASX-listed company will pay $20m upfront and the balance is due in 18 months, giving iKOU founders Naomi and Paul Whitfeld a multimillion-dollar windfall.
The transaction is being funded by Adore Beauty’s $32.3m balance sheet.
The deal is expected to be completed on July 31 and will bring iKOU’s 300 SKUs (Stock Keeping Units) across organic skincare, bath and body, home fragrance, herbal tea and spa lifestyle accessories into the Adore Beauty fold.
Adore Beauty chief executive Tamalin Morton said iKOU complemented and strengthened the company’s existing business, delivering revenue growth and margin expansion, as well as supporting private label and physical store initiatives.
“The brand’s extensive product range accelerates private label share of revenue, improves our margin profile, and provides our first store footprint across three premium locations,” she said.
IKOU’s range is available through its three retail boutiques in the Blue Mountains, Sydney, and Byron Bay, a direct-to-consumer website, and via wholesale distribution agreements with retail stockists and luxury spas.
The acquisition will be earnings per share (EPS) accretive from year one.
Established 17 years ago in the Blue Mountains by the Whitfelds, iKOU is forecast to generate revenue of $8.1m and EBITDA of $2m in the 2024 financial year.
Ms Morton said iKOU was renowned for its high-quality products.
“IKOU has a loyal, repeat customer base,” she said.
“The business has strong foundations, and we see additional opportunities to grow the brand, replicating its NSW success in other Australian states through the Adore Beauty platform.”
Adore Beauty was founded in 1999 by Kate Morris, a 21-year-old business student, and her boyfriend James Height.
Ms Morris used savings and a $12,000 loan from Mr Height’s parents to start the business, which she ran out of her garage in the Melbourne suburb of Northcote.
In October 2020, the company listed on the ASX and currently has more than 260 beauty brands. Ms Morris and Mr Height will retain their boards seats.
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