Highlights

• Schoolblazer Limited has received binding commitments for a two-tranche institutional Placement to raise approximately AUD 5.325 million, primarily to partially repay a parent-level Debt facility.

• FY26 Revenue is expected to come in at AUD 165-170 million on a constant currency basis, below earlier guidance, with Earnings impacted by weaker UK back-to-school conditions, China regulatory changes, and Australian ERP transition costs.

• FY27 guidance targets revenue of AUD 170-180 million and improved earnings, underpinned by 29 new school contracts won during FY26 and 22 already secured for FY27 commencement.

• The Group holds contracts with more than 1,066 schools globally across four brands — Schoolblazer, Trutex, Limitless, and Akoa — with a school retention rate of approximately 98% in FY26.

Schoolblazer Limited (ASX:SBZ), the ASX-listed Holding Company of a global school uniform and sportswear Business serving more than 1,000 contracted schools across the United Kingdom, Australia, New Zealand, and international markets, has announced a two-tranche institutional placement alongside a detailed trading update and FY27 outlook. The Capital raise is intended to partially repay a parent-level debt facility, reduce interest costs, and provide working capital, as the group navigates a period of below-expectations trading while maintaining a growing contracted school base.

FY26 Trading Environment and Revenue Drivers

FY26 proved a challenging year for the Schoolblazer Group, with revenue expected at AUD 165-170 million on a constant currency basis, against earlier guidance of approximately AUD 190 million. Several external factors contributed to the shortfall. In the United Kingdom, the imposition of value-added tax on private school fees in 2025 had a heavier impact on pupil enrolments than anticipated. Trutex's sales in China declined significantly following regulatory changes to uniform procurement rules, which reduced branded product Demand from the local distributor. Additionally, new UK government limits on compulsory branded uniform items prompted retailers to reduce inventory, weighing on the wholesale channel.

Despite these headwinds, the company's strategic growth channels — direct digital and direct retail, which represent the higher-margin contracted channels the group is deliberately shifting toward — showed relative resilience. Thirty-nine per cent of FY26 revenue came from the direct digital channel, with contracted schools making up approximately 60% of total schoolwear revenue. The group added 29 net new contracted schools globally during FY26 and has already secured 22 net new schools for FY27 commencement, including wins in Australia, New Zealand, and the United Kingdom.

Balance Sheet Repair and Capital Raise Structure

The two-tranche placement will raise approximately AUD 5.325 million through the issue of approximately 53.25 million new fully paid ordinary shares at AUD 0.10 each. Tranche 1 comprises approximately 14.4 million shares to be issued using existing placement capacity. Tranche 2 involves approximately 38.8 million shares, including a director participation component subject to Shareholder approval expected at a general meeting in December. Proceeds from the placement will primarily be used to partially repay the IFM Facility at the SBZ Parent Company level, reducing the balance and associated interest costs.

The group also undertook meaningful debt reduction during the September 2026 half, permanently reducing term debt through surplus cash. Following the placement and prior debt repayments, core bank debt is expected to decline materially from its August 2026 balance. The group's operating subsidiaries are funded by Westpac facilities including term debt and trade finance, with covenant testing for operating-level debt not commencing until September 2027, providing near-term Balance Sheet flexibility while management focuses on earnings recovery.

FY27 Recovery Outlook and Cost Reduction Programme

Management has provided FY27 guidance for the operating group at AUD 170-180 million in revenue and improved underlying earnings. The anticipated improvement is underpinned by a identified cost savings programme, with over half already confirmed or in execution, covering organisational structure optimisation and logistics efficiencies. Additional revenue benefit is expected from new contracted school contributions, with 22 schools already secured for FY27 start — more than 40% of the new wins concentrated in the Australian market.

The group is also progressing a global sourcing consolidation initiative targeting cost-of-goods savings, with benefits expected to begin accruing in FY27 and annualise further in FY28. Acting Managing Director Tim James, co-founder of the Schoolblazer UK business, has stepped in to lead the operating group, providing Leadership continuity as the business works through its recovery phase. While the previously stated longer-term EBITDA target has been deferred pending achievement of FY27 guidance, the company believes the underlying fundamentals of the contracted school model — including high retention rates and long-term contracts — remain intact.

Key Insights

Schoolblazer's trading difficulties in FY26 reflect a convergence of external pressures — regulatory, geopolitical, and macroeconomic — rather than a fundamental deterioration in its contracted school model. The high retention rate of approximately 98% and accelerating new school wins in Australia and globally suggest the underlying business continues to attract schools to its premium and value uniform platforms.

The Equity raise, while modest in absolute terms, serves the important function of reducing parent-level debt and demonstrating management's focus on balance sheet repair. Observers may watch the FY26 audited results release for clarity on Goodwill Impairment and purchase price allocation impacts, which are expected to create material non-cash charges in the statutory accounts.