Adore Beauty Group (ASX:ABY) reported a strong start to FY26, with management pointing to improving profitability, accelerating new customer growth, and early traction from its expanding omnichannel strategy during the 26 weeks ended 28 December 2025.
Record underlying EBITDA and revenue growth
CEO Sacha Laing said the group delivered “record underlying profit” despite what she described as a challenging retail environment, attributing the result to operating leverage, disciplined cost management, and growth in owned brands.
- Revenue of AUD 111.9 million, up 8.7% versus the prior corresponding period
- Record underlying EBITDA of AUD 4.1 million on a pre-AASB 16 basis, up 14.5% year-over-year, at a 3.7% margin
- Statutory EBITDA of AUD 4.9 million
- Gross margin of 35%, following what management described as a strong Black Friday and November–December trading period
- New customer growth of 21.8% compared with the prior year
New CFO Marcus Crowe said profit growth was driven by higher revenue, increased contribution from “margin-accretive own brands and retail media,” and cost control, with marketing efficiency a notable contributor.
EBITDA reporting change tied to retail footprint
Crowe said the company has changed how it reports profit, commencing reporting EBITDA on an “underlying and pre-AASB 16 basis” due to the growing retail footprint and the requirements of AASB 16.
He said the measure “takes account of rental costs and best reflects the underlying performance of an omnichannel business.” Laing noted the 3.7% EBITDA margin on this basis was “equivalent to 5.5% under the previous reporting methodology,” and management said the result was in line with guidance.
Marketing efficiency, loyalty, and app adoption
Management emphasized improved marketing efficiency and growth in its loyalty ecosystem. Laing said customer acquisition costs more than halved, with new customers growing at the fastest rate in more than four years. Crowe added marketing costs fell by almost 30%, with marketing as a percentage of sales down 520 basis points to 8.6%.
The company also highlighted rising loyalty participation. Laing said Adore Rewards loyalty members contributed 78% of sales in the half, up from 65% in the prior year. Later in the presentation, she said members contributed 77% of sales and that the loyalty program grew to 509,000 members.
Adore Beauty’s active customer base increased 4.7% year-over-year to 850,000, while the “contactable database” rose more than 14% to 1.35 million. Laing said this database supports more cost-effective targeting and marketing efficiency, and referenced a FY27 target of more than 1.25 million active customers.
App adoption also increased. Laing said the app represented 35% of online sales in the half, up from 25% in the prior year.
Store rollout and omnichannel strategy
The company said it stepped up its retail rollout in the half. Laing stated Adore Beauty opened 10 retail stores across the group in the first half (and said an additional store opened in early January), bringing the national store network to 18 across the Adore Beauty and EQ brands. Management said two more stores are expected to open in the second half of FY26, with sites secured for a further four stores later in calendar 2026, and reiterated a target network of 25+ stores by the end of FY27.
Laing said the retail channel is performing with higher conversion than e-commerce at 11.1%, “just under” the company’s longer-term 12% target, and that new customers accounted for almost 30% of in-store transactions. She also said more than 670,000 customers have visited stores so far, describing stores as a way to introduce the brand to a broader customer base and improve “quality of earnings,” as in-store customers are “typically less promotionally driven.”
The company also discussed an emerging cohort of customers shopping across both channels, saying omnichannel customers contributed more than 5% of revenue in the half and have a lifetime value around 20% higher than single-channel customers.
On store performance, Laing said Western Australia has outperformed due to lower prior online penetration, aligning with the strategy of bringing the brand to customers who have not previously experienced it.
Infrastructure investments and FY26 outlook
Management outlined several investments aimed at improving operational efficiency. Laing said the company secured a long-term lease for a new semi-automated national fulfillment center, expected to roll out in Q1 FY27, and expects its ERP replacement to go live in Q4. She also said the group is developing a custom AI platform for customer experience and internal analysis, with in-house AI being integrated into customer support, workflows, and business analysis.
On the fulfillment center, Laing said the 6,300 square meter Broadmeadows facility is expected to include automated picking and replenishment. She said the initial capital outlay is approximately AUD 8 million, predominantly funded by a CBA-backed project-based facility, with expected payback in under four years.
Crowe said the company ended the half with a closing cash balance of AUD 8.2 million and generated operating cash flows of AUD 2.4 million. He attributed higher inventory partly to typical Christmas supply closures and in-store stock, and said the company is exploring funding options to support its growth strategy.
Looking ahead, management reaffirmed its FY26 expectations, including:
- Underlying group EBITDA margin of 3%–4% on a pre-AASB 16 basis (equivalent to 5%–6% under the prior methodology)
- Owned brands representing more than 6% of group revenue in FY26
- Continued loyalty member and app growth to offset reduced promotional intensity
- A national retail network of 20 stores by the end of the half
During Q&A, Laing said there is no equivalent promotional spike like Black Friday in the second half, and that the company intends to remove unprofitable promotions while leaning on loyalty, app adoption, and the largely full-price store channel to support margin outcomes. She also said the company did not provide a trading update for January and February, consistent with its approach over the last two years.
Asked about market share, Laing said the company’s 8.7% growth compared with an industry category growth rate of around 4% implied “meaningful share” gains during the half.
About Adore Beauty Group (ASX:ABY)
Adore Beauty Group Limited operates an integrated content, marketing, and e-commerce retail platform in Australia and New Zealand. The company retails beauty and personal care products, including skin, hair, make up, accessories, and others, as well as wellness and fragrance products under various brands. It also offers Beauty IQ, an editorial content platform that offers beauty news, reviews, tips, and expert how-to articles to educate the customers on purchasing decisions. The company was founded in 2000 and is based in Northcote, Australia.
