Adore Beauty founder Kate Morris: Why I sold a 25% stake in my $10 million business to Woolworths
Friday, May 15, 2015/
Kate Morris, founder of one of Australia’s first online cosmetics retailers and a previous Smart50 finalist, Adore Beauty, has sold a 25% stake in her business to Woolworths Limited Australia for an undisclosed sum.
Speaking to SmartCompany upon the announcement yesterday afternoon, Morris says she is excited about what the investment will mean for the business she founded in her garage in 2000.
“It’s all about taking the next step for Adore Beauty,” says Morris.
“We’ve grown very well over the past 15 years, but we thought the timing was right to take things to the next level.”
Morris says Adore Beauty, which is set to turn over more than $10 million this financial year, had been approached by a number of players before she decided to accept Woolworths’ offer.
“We had a number of opportunities as far as bringing investment into the business, some people were just cash, some people had more passion,” she says.
“[Woolworths] has a lot of recourses. This is a new vertical for them, premium beauty, but they already have a lot of core resources for running an online business.”
As well as boosting its online profile, Morris says the cash injection will help Adore Beauty lift its marketing and customer reach.
Morris says Woolworths, which also owns brands including Dan Murphy’s, BIG W and EziBuy, will not become involved in Adore Beauty’s day-to-day operations and says she will remain in her role as chief executive of the company, although the retail giant will be represented on the Adore Beauty’s board.
“There are a lot of smart people there, there is a definite benefit from being involved with a company that is so strong,” she says.
Morris says Woolworths were attracted to Adore Beauty’s knowledge of and positioning in the market.
“They have confidence we know what we’re doing as far as premium beauty goes. We understand the premium beauty customer,” she says.
Morris has previously shrugged off concerns about international entrants into the Australian cosmetics market, such as Sephora, saying Aussie customers have begun to flock back to local retailers for service. Adore Beauty’s sales have also shown incredible strength over recent months, against the backdrop of a lower Australian dollar.
Morris says the deal with the supermarket giant, which took over a year to secure, was never something she had set out to achieve.
“It wasn’t something I was some necessarily aiming at,” she says.
“I really think a lot of businesses sometimes have a primary focus of ‘who can we get as investors’, but that’s the wrong way to go about it. You’ve got to think about what’s right for the customer and everything else comes after that. If you build a strong business, then success will follow.”
While Morris admits any lessons she’ll learn from the deal will probably be clearer down the track, she says the hardest learning curve so far has been keeping focused on the business without being distracted by the investment.
“With anything, the key is to keep your eye on the goal of the business, you can’t get distracted,” Morris says.
“The biggest challenge in doing this kind of deal is that it takes your eyes off business.”
“So I have been navigating and steering through this period of strong growth, which can be hairy in itself, whilst trying to get deal done.”
But Morris says she has managed to steer the ship by splitting responsibilities with her business partner, James Height.
Emily Amos, general manager at Woolworths Marketplace said in a statement Woolworths is “pleased to be able to support a growing and innovative Australian online retailer like Adore Beauty in a channel that is traditionally held by international players”.
“We believe Adore will achieve its ambition of being the number one online premium beauty retailer in Australia,” said Amos.
“Now it’s just onwards and upwards,” adds Morris.
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