Adore Beauty Group Looking for Profit Step-Up after Record FY26 Revenue

Adore Beauty Group (ASX: ABY) increased revenue 4.3% to $207.3 million in FY26, with its expanding store network, owned brands, and retail media helping the beauty retailer reach a record result despite softer second-half trading.

Underlying EBITDA fell 39.3% to $3.8m as a higher fixed-cost base from the still-maturing retail network and challenging conditions weighed on profitability.

Adore Beauty opened 13 stores during FY26 to take its national network to 20, while retail locations contributed $18.6m of revenue and helped lift new customer acquisition by 14.4% to 418,600.

The group is targeting at least 10% revenue growth and underlying EBITDA of $9m to $13m in FY27, supported by maturing stores, higher-margin revenue streams and operating efficiencies.

Reshaped Customer Economics

More than half of the retail network was less than a year old at the end of FY26, but in-store transaction conversion improved from 13.1% in the first half to 17.4% in the second half as store capability matured.

Omnichannel customers generated 9.6% of product revenue for the year and 11.9% in the second half, with their lifetime value 2.5 times that of online-only customers and spending per customer 52% higher.

Stores accounted for 26% of total new customers during FY26 compared with 3% a year earlier, helping offset a deliberate reduction in paid reacquisition of lower-value customer cohorts.

“FY26 was a significant year of investment and transformation for Adore Beauty—with the most capital-intensive period in the company’s 26-year history now largely behind us, we have delivered record group revenue while putting in place the foundations for our next phase of growth,” chief executive officer Sacha Laing said.

“While this investment cycle and a challenging retail environment weighed on earnings in FY26, we enter FY27 with a stronger, more diversified business and clear line of sight to a material step-up in revenue and profitability.”

Earnings Lift Targeted

Adore Beauty completed its new semi-automated 6,300-square-metre National Distribution Centre, with automated picking and replenishment expected to deliver $2m in annual labour savings as operations ramp up from the second quarter of FY27.

A new enterprise resource planning system went live across the business in June, while a head office restructure is expected to generate more than $2.5m of annualised cost efficiencies.

Marketing and advertising expenditure fell 22.8% to $18.4m as customer acquisition cost declined 37.4% to $35.2 per customer, while active customers rose 2.6% to 858,800.

Adore Rewards reached 538,000 active loyalty members who contributed 81% of sales, while mobile app revenue increased 21% and represented 36% of online sales.

The higher-margin iKOU brand delivered double-digit revenue growth, helping owned brands increase their contribution to 5.8% of group product revenue.

Higher FY27 Profitability

Adore Beauty expects the earnings improvement in FY27 to be supported by almost $4m in annualised organisational and cost savings, the maturation of its existing stores, growth in retail media and owned brands and operating leverage from higher revenue.

Five additional stores across Adore Beauty and iKOU are planned for the first half of FY27, taking the national network to 25 before the end of the 2026 calendar year.

The retail channel recorded an underlying EBITDA loss of $1.1m in FY26, but the group expects the network will not be a material drag on profitability in FY27 as stores move towards operational maturity over an 18-to-24-month period.

Remaining growth and infrastructure capital expenditure is expected to be about $8m in FY27, with net debt forecast to peak in the first half before declining as EBITDA and operating cash flow improve.