Adore Beauty (ASX:ABY) shares surged almost 20% on Monday after the beauty retailer delivered record FY26 revenue, showing that its aggressive store rollout and infrastructure Investment are starting to pay off — even as near-term Earnings remain squeezed.

FY26 Results at a Glance

  • Record Group Revenue up 4.3% to $207.3 million.
  • Gross Margin down 52 bps to 34.8% for the year, though H2 margin was 18 bps ahead of last year.
  • Underlying EBITDA of $3.8 million (1.8% of revenue), roughly in line with guidance.
  • New customer Acquisition up 14.4% to 418,600; acquisition cost down 37.4% to $35.20 per customer.
  • Active customer base up 2.6% to 858,800; loyalty members now drive 81% of sales.

Why Investors Are Excited Despite Thin Margins

The market appears to be looking past this year's thin profit and focusing on the underlying growth drivers: 13 new stores opened (taking the network to 20), a new National Distribution Centre now live in Broadmeadows, a fresh ERP system, and AI tools rolled out across the Business — all delivered on time and budget.

Owned brands, including IKOU, grew revenue at double-digit rates and now make up 5.8% of product revenue, while store transaction conversion improved sharply from 13.1% to 17.4% between halves — a sign the retail network is maturing faster than expected.

Balance Sheet and FY27 Targets

  • Net Debt of $9.3 million with $14.4 million of undrawn facilities.
  • FY27 capex guided at ~$8 million, weighted to H1.
  • FY27 targets: at least 10% revenue growth and underlying EBITDA of $9–13 million.
  • ~$4 million in annualised cost savings expected to support FY27 earnings.

The Bottom Line

Today's rally suggests investors believe Adore Beauty's investment cycle is nearing an inflection point — record revenue, improving conversion and lower acquisition costs point to a business scaling efficiently. The real test will be whether FY27 guidance of $9–13 million EBITDA is met as new stores and infrastructure mature.