Adore Beauty Revenue Hits Record but Profit Falls 39% in FY26

Adore Beauty Group (ASX: ABY) posted record revenue of A$207.3 million in FY26, up 4.3% from the prior year. Underlying EBITDA fell 39% to A$3.8 million as the cost of building a national store network and a softer second-half trading environment weighed on profitability.

The company opened 13 stores during the year, bringing its total to 20. The retail locations contributed $18.6 million in revenue and helped lift new customer acquisition 14.4% to 418,600. More than half of the stores were less than a year old at year-end. 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 – those who shopped both online and in-store – generated 9.6% of product revenue for the full year and 11.9% in the second half. Their lifetime value was 2.5 times that of online-only customers, and they spent 52% more per person. Stores accounted for 26% of all new customers in FY26, compared with 3% a year earlier, helping offset a deliberate reduction in paid reacquisition of lower-value customer cohorts.

Adore Beauty completed a new 6,300-square-metre semi-automated National Distribution Centre during the year. Automated picking and replenishment is expected to deliver $2 million in annual labour savings as operations ramp up from the second quarter of FY27. A new enterprise resource planning system went live in June. A head office restructure is expected to generate more than $2.5 million of annualised cost efficiencies.

Marketing and advertising expenditure fell 22.8% to $18.4 million as customer acquisition cost declined 37.4% to $35.2 per customer. Active customers rose 2.6% to 858,800. The Adore Rewards loyalty program reached 538,000 active members, who contributed 81% of sales. 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.

For FY27, Adore Beauty is targeting at least 10% revenue growth and underlying EBITDA of $9 million to $13 million. The company expects the improvement to be supported by almost $4 million in annualised organisational and cost savings, the maturation of 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 $1.1 million in FY26. 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 $8 million in FY27. Net debt is forecast to peak in the first half before declining as EBITDA and operating cash flow improve.

“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.”