Adore Beauty Group Ltd (ASX:ABY) expects FY26 revenue for the first 47 weeks to May 24 to rise 7.4% on the prior corresponding period to $193.4 million, despite softer Q4 trading conditions.
The company expects FY26 underlying EBITDA of about $4 million, representing around 2.0% of revenue, with H2 gross margin forecast in line with the prior year at 34.5%.
New customer acquisition is up 13.9% year to date, supported by Adore Beauty’s store rollout, loyalty program, own brands and the iKOU business.
Adore opened three new stores in H2-FY26 at Kotara, Parramatta and Robina, taking its network to 20 locations, comprising 14 Adore Beauty stores and 6 iKOU stores.
“More pronounced cost-of-living pressures have seen an increase in promotional activity in the market through April and May, resulting in a tempered slowdown in trading in Q4," CEO Sacha Laing said. "Pleasingly, the Group is expecting to achieve gross margins for H2 in line with the prior year, achieved through our higher margin own brands and store network.
"While we are benefiting from new growth levers, including our loyalty program, higher-margin retail network and iKOU brand, we will not see the full benefit of these initiatives until next financial year. Store performance is in line with expectations with our retail network continuing to cost-effectively introduce new customers to the Adore Beauty brand, increase revenues, and support our online channel through new customer acquisition. New customer acquisition is almost 14% higher than in the same period last year, noting that we are cycling a return to growth in H2.”
FY27 targets point to step-up
Looking ahead, Adore Beauty is targeting FY27 revenue growth of at least 10% and underlying EBITDA of $9 million to $13 million.
The company plans to open a further four Adore Beauty stores and 1 iKOU store in H1-FY27, lifting the national network to 25 locations.
“Our large infrastructure projects remain on budget and on schedule with the ERP transition expected to be completed in the coming weeks and commissioning of our new National Distribution Centre (NDC) on track for the first quarter of FY27. Both will support a material step-up in efficiency and customer experience, with the NDC saving approximately $2 million in annualised labour costs. In addition, we have recently reshaped our Head Office team delivering over $2.5 million in cost efficiencies on an annualised basis.
“The Group will open a further four Adore Beauty stores and one iKOU store during H1-FY27, bringing the total network to 25 locations nationally. While the macro environment remains challenging and the ongoing impact to trading conditions is somewhat uncertain, the Group is well-positioned to benefit from a number of growth and efficiency initiatives, including the recent deployment of market leading AI capability. We believe, whilst there is uncertainty in external market conditions, our FY27 targets appropriately consider the external economic conditions at this time,” Laing said.
Cost savings and infrastructure next
Adore Beauty said its ERP transition is expected to be completed in coming weeks, while commissioning of its new National Distribution Centre remains on track for Q1-FY27.
The NDC is expected to save about $2 million in annualised labour costs, while a reshaped head office team is expected to deliver more than $2.5 million in annualised cost efficiencies.