Background: Adore Beauty began as an online-only beauty retailer in 1999 and listed on the ASX in 2020 at a ~$650 million valuation. Since then, its market value has slid to under $80 million, which is a prettysharp reversal for one of Australia’s early e-commerce success stories.

What happened: For the half, Adore Beauty's sales rose 8.7% to $112 million, but profit told a very different story. Net profit plunged 70% to just $189,000. The key driver was heavy Black Friday discounting. While promotions helped lift revenue, they significantly eroded margins.

What else: Investors weren’t impressed. Shares fell nearly 7% on the result. Adore is now pushing into physical retail, opening 10 stores during the half to bring its total to 18, with plans to exceed 25 stores by FY27. The strategic question now is whether aggressive discounting is building long-term loyalty...or simply training customers to wait for sales.

What's the key learning?

💡Discounting can boost short-term sales, but it often crushes profits. Adore's revenue rose nearly 9%, but heavy Black Friday promotions, where beauty discounts often exceed 33% versus a 24% average can slash margins.

💡Here's the thing: revenue growth does not guarantee earnings growth. When prices are cut aggressively, each sale contributes less to covering costs.

💡While Black Friday promotions can be strategic, repeated sales risk teaching shoppers to wait for deals, compressing margins and ultimately locking a retailer into a low-profit cycle. And this is what Adore is facing right now.