Key Highlights

  • Adore Beauty Group (ASX:ABY) delivered record FY26 Revenue of $207.3 million, up 4.3% from the prior corresponding period.
  • Gross Margin declined 52 basis points to 34.8%, although the second-half margin was 18 basis points ahead of the corresponding period.
  • Underlying EBITDA was $3.8 million, with the retail channel recording an underlying EBITDA loss of $1.1 million during the year.
  • New customer Acquisition increased 14.4% to 418,600, while customer acquisition cost declined 37.4% to $35.20 per customer.

Adore Beauty Group (ASX:ABY) reported record Group revenue of $207.3 million for FY26, representing growth of 4.3% from the prior corresponding period. The result was supported by contributions from the expanding retail network, retail media and owned brands, including IKOU.

The revenue increase came during a year in which the company substantially expanded its operating infrastructure. Adore Beauty opened 13 new stores, comprising 11 Adore Beauty locations and two IKOU stores, taking its national network to 20 locations at the end of FY26.

At the same time, the company completed construction and commissioning of a new semi-automated National Distribution Centre, rolled out a new enterprise resource planning system and introduced artificial intelligence capabilities across selected internal and customer-facing functions.

Gross Margin Declines Despite Second-Half Improvement

Gross margin was 34.8% for FY26, down 52 basis points from the prior corresponding period. The company attributed the annual movement to its first-half performance. In the second half, however, gross margin was 18 basis points ahead of the corresponding period.

Underlying EBITDA was $3.8 million, equivalent to 1.8% of revenue and broadly consistent with the company's May 2026 guidance. The result reflected a higher fixed-cost base associated with the growing retail footprint and the broader Investment program, alongside challenging retail conditions, particularly during the fourth quarter.

The retail channel recorded an underlying EBITDA loss of $1.1 million in FY26. More than half of the retail network was less than one year old during the period, and the company expects stores to require approximately 18 to 24 months to reach operational maturity.

Retail Network Expands Customer Reach

The company's omnichannel strategy generated a $18.6 million revenue contribution from its 20-store network during FY26. Store transaction conversion increased from 13.1% in the first half to 17.4% in the second half, an improvement of 429 basis points.

Stores also became an important source of new customer acquisition, contributing more than 114,000 new customers during the year. Overall new customer acquisition increased 14.4% to 418,600, despite the company cycling 6.1% growth in the previous corresponding period.

Customer acquisition costs declined 37.4% during the year to $35.20 per customer. The improvement occurred alongside changes in the company's acquisition strategy and a deliberate reduction in paid reacquisition of lower-value customer groups.

The active customer base increased 2.6% to 858,800. Meanwhile, the 538,000 active members of the Adore Rewards loyalty program accounted for 81% of sales, compared with 70% in the previous year.

Owned Brands and IKOU Add Higher-Margin Revenue

Owned brands, including IKOU, recorded double-digit revenue growth during FY26. Their contribution increased to 5.8% of total Group product revenue, up 107 basis points from the prior period.

IKOU's performance was supported by a Brand refresh, infrastructure investment and greater availability through third-party channels. A seventh IKOU store is under construction in Hobart, extending the brand's physical presence beyond New South Wales and Victoria.

Adore Beauty also plans to introduce an IKOU loyalty program in the first quarter of FY27 and a digital wholesale sales platform in the second quarter. These initiatives are intended to broaden the brand's customer reach and distribution.

Distribution and Technology Investments

The new 6,300-square-metre National Distribution Centre in Broadmeadows became operational in mid-July 2026. Automated picking and replenishment are forecast by the company to generate approximately $2 million in annual labour savings while increasing dispatch capacity.

The new ERP platform was rolled out across the Business in June, while internally developed AI tools are being used for personalised product recommendations, customer queries and operational analysis.

The company said these infrastructure projects were delivered on budget and schedule. Their financial contribution is expected to become more visible from the second quarter of FY27.

Capital Position and FY27 Outlook

As at 30 June 2026, Adore Beauty had net Debt of $9.3 million and $14.4 million of undrawn facilities. Its working Capital Facility with Commonwealth Bank of Australia was increased to $17 million. Remaining growth and infrastructure Capital Expenditure is expected to be approximately $8 million in FY27, with spending weighted towards the first half.

The company expects net debt to peak during the first half of FY27 before declining in the second half as EBITDA and Operating Cash Flow improve.

For FY27, Adore Beauty has reaffirmed its target of at least 10% Group revenue growth and underlying EBITDA of $9 million to $13 million on a pre-AASB 16 basis. The targeted Earnings improvement is expected to be supported by approximately $4 million in annualised organisational and cost savings, maturing stores, growth in retail media and owned brands, and Operating Leverage from higher revenue.

Conclusion

Adore Beauty's FY26 performance combined record revenue with significant expenditure on stores, distribution infrastructure, technology and organisational capability. Revenue increased 4.3%, while gross margin declined 52 basis points and underlying EBITDA remained at $3.8 million as the expanded retail network carried costs ahead of maturity. Customer acquisition metrics improved, owned brands increased their contribution and the company's omnichannel customer base continued to develop. FY27 performance will depend on the maturation of the expanded store network, the contribution from the new distribution centre and ERP system, cost savings, and the company's ability to achieve its targeted revenue growth in a challenging retail environment.