Adore Beauty Doubles EBIT as Retail Expansion Kicks Off
Adore Beauty Group reports a robust H1 FY25 with EBIT surging 118%, driven by strategic shifts and the launch of its first physical stores.
- EBIT rises 118% to $2.7 million, margin expands to 2.6%
- EBITDA nearly doubles to $4.6 million with 4.4% margin
- Record gross margin of 35.9%, up 240 basis points
- Revenue grows modestly by 2.3% to $103 million
- First physical retail store opens February 2025, with plans for 25+ stores
Strong Financial Momentum in H1 FY25
Adore Beauty Group Limited (ASX: ABY) has delivered a compelling first half performance for FY25, showcasing the early fruits of its refreshed strategy. The company reported an EBIT of $2.7 million, marking a 118% increase over the prior corresponding period, alongside a 2.6% EBIT margin. EBITDA also surged by 94% to $4.6 million, with a margin of 4.4%, underscoring improved operational efficiency and profitability.
Revenue growth was more modest, rising 2.3% to $103 million, but the standout metric was the record gross margin of 35.9%, up 240 basis points from the previous year. This margin expansion signals a successful shift towards higher-quality earnings and more profitable revenue streams.
Strategic Initiatives Driving Profitability
CEO Sacha Laing attributed the strong results to disciplined execution of promotional activities, accelerated growth of owned brands, and increased contribution from retail media, a highly margin-accretive channel. The company also focused on operating cost and working capital efficiencies, which collectively enhanced underlying profitability.
These initiatives align with Adore Beauty’s three-year strategy to evolve into a leading omni-channel beauty retailer, blending its strong e-commerce foundation with a growing physical retail presence.
Retail Expansion: A New Chapter
Marking a significant milestone, Adore Beauty opened its first physical store on 1 February 2025 at Westfield Southland in Victoria. A second store is slated to open shortly at Watergardens, Victoria, followed by new iKOU branded stores in Berry, NSW, and Melbourne CBD in March. The company plans to open between 4 to 6 additional stores throughout 2025, with a longer-term target of 25+ stores.
This retail rollout is expected to materially boost revenue growth and profitability metrics, as the company leverages its owned brands and retail media capabilities in new geographic markets.
Guidance and Outlook
Adore Beauty reaffirmed its EBITDA margin guidance of 4-5% for the full fiscal year, signaling confidence in the ongoing execution of its strategy. The company’s cash position remains healthy at $11.7 million as of 31 December 2024, providing a solid foundation for its expansion plans.
Investors will be watching closely as the physical retail rollout unfolds, testing the company’s ability to translate its online success into brick-and-mortar profitability.
Bottom Line?
Adore Beauty’s strategic pivot to omni-channel retail is gaining traction, but the real test lies in scaling physical stores profitably.
Questions in the middle?
- How will the new physical stores impact overall revenue and margins in the coming quarters?
- Can Adore Beauty sustain gross margin improvements amid increased retail operating costs?
- What is the potential scale and profitability timeline for the planned 25+ store network?
