Adore Beauty has achieved record sales in FY26, but the company’s strategic investments amid a more challenging retail environment hurt its bottom line.
Revenue for the 12 months ended June 30 rose 4.3 per cent to $207.3 million, driven by owned brands, strong retail media growth, and a $18.6 million contribution from stores.
The group opened 13 stores during the year, including 11 Adore Beauty and two Ikou locations, raising the national network to 20 stores. New customers were up 14 per cent.
Gross margin, however, was down 52 basis points to 34.8 per cent. Underlying earnings before interest, taxes, depreciation, and amortisation (EBITDA) were $3.8 million, compared to record EBITDA of $8.1 million in the prior year.
Management said FY26 was a “transitional year” for earnings, as the group accelerated its omnichannel strategy, more than doubling its retail footprint, and completed major investments in a new national distribution centre, enterprise resource planning (ERP) software, and technology capabilities.
The year’s earnings also reflect a higher fixed cost base arising from Adore Beauty’s growing, albeit immature, store network, combined with a challenging retail environment, particularly in the fourth quarter.
“Given more than half the network was less than a year old in FY26 and new stores are not expected to reach operational maturity for 18-24 months, the retail network is not expected to be a material impost on profitability in FY27,” the group said.
Adore Beauty opened its first brick-and-mortar store early last year. Before that, it operated strictly as a digital-first e-commerce store.
Management expects the strategic investments made recently will translate into stronger growth in the new fiscal year.
“The foundations to support our scaling omnichannel operations are now in place. Our large infrastructure projects have been delivered on budget and on schedule, and we will see the full impact of these investments in FY27 and beyond,” said CEO Sacha Laing.
“While the macro environment dampened the performance of our business in FY26, new growth levers have enabled us to weather the economic headwinds and set us up for material revenue and profit growth over the years ahead,” Laing added.
The group has set a FY27 profitability target of $9-13 million, underpinned by revenue growth of at least 10 per cent.
