or the first half of FY27, pushing the total to 25 by the end of the calendar year. This is not incremental experimentation, and management has called FY26 the most capital-intensive period in the company’s history, spanning a new national distribution centre, an ERP overhaul and AI deployment across customer-facing and internal systems. The bet behind the bricks The logic driving this shift is not really about foot traffic or square metreage; it’s about customer value. Adore Beauty’s data shows omnichannel shoppers carry 2.5 times the lifetime value of single-channel customers – a figure that climbs to 3.4 times for customers who were first acquired in a physical store. That is the real argument for stores, which function not as a new sales channel but as a superior acquisition engine that produces stickier, higher-spending customers who then migrate back online. The early numbers support the thesis. Stores added more than 114,000 new customers in FY26, roughly 26 per cent of all new customer growth, while overall acquisition costs fell 37.4 per cent to $35.20 per customer. In-store conversion rates climbed from 13.1 per cent in the first half to 17.4 per cent in the second – a sign that even young, unoptimised locations are already improving. Because more than half the store network is under a year old, and management expects stores to take 18 to 24 months to mature, that trajectory matters more than any single quarter’s output. Loyalty as the connective tissue Physical retail is only half of the equation, the other half is making sure customers who walk into a store don’t disappear back into anonymity. That is loyalty’s job. Adore Rewards members – now 538,000 active participants – accounted for 81 per cent of sales in FY26, up sharply from 70 per cent a year earlier, while the group’s app drove 36 per cent of online sales, a 21 per cent increase on the prior year. Combined with a subscription service and the expansion of owned brands, these are the mechanisms turning one-off store visits into recurring digital relationships – precisely the flywheel the omnichannel strategy is designed to spin. IKOU, the group’s higher-margin owned brand, is emerging as a parallel proof point. It delivered double-digit revenue growth, is opening its seventh store in Hobart, and is preparing its first loyalty program and a digital wholesale platform for early FY27. Owned brands now make up 5.8 per cent of group product revenue, a modest but rising share that management expects to accelerate materially. The uncomfortable middle chapter However, none of this comes free. Underlying EBITDA fell 39.3 per cent to $3.8 million, and the group swung to a statutory net loss, largely on the back of one-off store-opening, restructuring and technology costs. The retail channel itself posted a $1.1 million underlying EBITDA loss, unsurprising given how immature the fleet still is. Chief executive Sacha Laing has framed this squarely as a transitional cost rather than a structural one, arguing the “most capital-intensive period” in the company’s history is now largely behind it. Whether that framing holds is the question that will define FY27. Management has set a profitability target of $9 to 13 million, built on at least 10 per cent revenue growth, close to $4 million in annualised cost savings from the new automated distribution centre, and rising contributions from stores, IKOU and retail media. Adore Beauty’s chair Jason Murray has gone further, describing the strategy as an attempt to “challenge the traditional beauty retail model in Australia” – a claim that will look either prescient or overreaching depending on how quickly those 20-plus stores convert from cost centres into the customer factories the company is betting they can become.