I've done some basic analysis on Adore Beauty's customer retention & and new customer acquisition rates.
To summarise, there are a combination of scenarios that will need to keep occurring for Adore to grow it's customer base. YOY their new customers have grown by 66% - Basic calculation of Old customers X Retention rate - Current Customers (Works out to be (590*65%-777)*-1)). That's a pretty staggering customer growth number. A quick key note on this - the new customer growth is calculated AFTER old customers are gone, meaning it more clearly highlights how many of the total customers are new customers (This can lead to the "new customer" number looking larger than what you might think, I calculate it this way as I feel it takes on a more conservative approach).
Using new customer growth rates of 50%, 60%, 70%, 80%, 90% (Scenario's 1-5) and Retention rates of 50%, 55%, 60%, 65% and 70%, along with the current average spend per active customer of $213 - we get a table that looks like the below (extrapolated for 4 years).
Given the commentary in the recent half year report (below), essentially stating that operating margins will remain the same - my personal view is that the retention rate of customers needs to stay above 65% with a similar customer growth rate in order for Adore Beauty to grow their profitability.
Although these are just basic calculations, I think it points out how key the customer retention metrics actually are in the success of Adore.
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