Highlights

• Schoolblazer has raised approximately AUD 5.325 million via a two-tranche institutional Placement to partially repay parent-level debt, reducing interest costs and improving Balance Sheet flexibility.

• FY26 Revenue is expected at AUD 165-170 million on a constant currency basis, below earlier guidance, with shortfalls concentrated in UK direct digital, China wholesale, and broader wholesale channels.

• FY27 guidance targets AUD 170-180 million revenue and materially improved underlying earnings, underpinned by identified cost savings of approximately AUD 4 million, new school contract contributions, and initial sourcing benefits.

• The group's school base grew to 1,066 contracted schools globally in FY26 with a 98% retention rate, and 22 additional schools have already been contracted for FY27 — including a 26% growth in Australian contracted schools.

Schoolblazer Limited (ASX:SBZ), the ASX-listed Holding Company of a global school uniform and sportswear group operating under four brands across more than 1,000 contracted schools in the United Kingdom, Australia, New Zealand, and international markets, has presented an investor update outlining both the factors behind FY26's below-guidance revenue outcome and the foundations of its FY27 recovery strategy. The update, accompanying a two-tranche institutional placement, highlights the company's confidence in its contracted school model even as it manages through a period of external headwinds and operational transition costs.

Understanding the FY26 Revenue Shortfall

FY26 proved more challenging than anticipated for the Schoolblazer Group across several channels and geographies. In the United Kingdom, the 20% value-added tax imposed on private school fees in 2025 had a heavier-than-expected impact on enrolments, reducing direct digital volumes in the key back-to-school period. Trutex's China wholesale channel saw a significant decline following regulatory changes to uniform procurement rules that reduced branded product Demand from the local distributor. In the UK wholesale channel, new government limits on compulsory branded uniform items prompted retailers to reduce inventory ahead of implementation, creating de-stocking headwinds. The Middle East also saw demand dampened by ongoing conflict disrupting school return schedules.

In Australia, an ERP system transition temporarily affected fulfilment during the second half of the year, though this disruption has now been resolved and operational benefits are beginning to materialise. Despite these headwinds, the company noted that its strategic growth channels — direct digital and direct retail, which represent the higher-margin contracted channels targeted for long-term mix improvement — showed relative resilience, with direct digital volumes down only modestly for the year. School-contracted revenue as a proportion of total schoolwear revenue increased over the prior period, reflecting the ongoing shift toward a contracted revenue base.

FY27 Recovery Levers: Cost, Mix, and School Growth

The FY27 recovery case rests on three primary levers. The first is a defined cost savings programme totalling approximately AUD 4 million in target benefit for FY27 (with more than AUD 5 million on an annualised basis), of which more than half is already confirmed or in execution. These savings cover organisational structure, logistics optimisation, and overheads, and exclude non-recurring implementation costs. The second lever is the contribution from new contracted schools, with 29 added globally in FY26 and 22 already contracted for FY27 commencement — the Australian market alone accounting for over 40% of new FY27 wins.

The third lever is channel mix improvement, with the continued shift toward contracted direct-to-consumer channels expected to lift gross Margin by approximately one percentage point relative to FY26. A global sourcing consolidation initiative targeting 5% cost-of-goods savings is also underway, with benefits expected to begin flowing in FY27 and annualise more fully in FY28. Acting Managing Director Tim James, co-founder of the Schoolblazer UK business, has stepped into the operating Leadership role, bringing continuity and deep product and operational knowledge to the recovery phase.

Capital Structure and Debt Position Post-Raise

The two-tranche placement has been structured to address parent-level obligations at Schoolblazer Limited while keeping operating Subsidiary debt facilities in place. The group's operating subsidiary, Schoolblazer Group, is funded by Westpac facilities comprising term debt and seasonal trade finance, with covenant testing not commencing until September 2027 — providing meaningful near-term flexibility as the Business works through its recovery. The IFM Facility at the SBZ Parent Company level, which is being partially repaid with placement proceeds, has a single net Leverage covenant with waivers and amendments in place through certain periods.

The group's residual Investment portfolio at the SBZ parent level, which includes both listed and unlisted investments, remains available as a potential source of liquidity, though realisation has been slower than anticipated in recent volatile market conditions. The company's FY26 audited statutory results, expected after the release of this investor presentation, are anticipated to include material non-cash charges related to purchase price allocation and potential Goodwill Impairment assessments — both standard accounting treatments following the consolidation of the group that do not reflect the underlying operational performance of the Schoolblazer Group businesses.

Key Insights

Schoolblazer's FY27 recovery case is built on a combination of structural improvements — contracted school base growth, channel mix shift, and cost discipline — rather than a reliance on the Reversal of external headwinds. This distinction is important: some of the FY26 pressures, such as China regulatory changes and UK VAT effects, may persist, while others such as wholesale de-stocking are more likely to normalise as retailer inventories reset.

The acceleration in Australian school wins, representing a 26% growth in contracted schools for FY27 to date, is a particularly noteworthy development given the relative immaturity of the Australian business compared with Schoolblazer's established UK base. If the Australian platform continues to scale at this rate, it could become a meaningful Earnings contributor over the medium term and partially offset ongoing uncertainty in the UK market.