Adore Beauty’s Strategy Refresh Sparks 126% EBIT Surge in H1 FY25

Strong Financial Momentum in H1 FY25

Adore Beauty Group Limited (ASX: ABY) has unveiled robust financial results for the six months ended 31 December 2024, showcasing the early success of its refreshed strategy. The company reported a near doubling of EBITDA to $4.7 million, up 98% year-on-year, and an even more striking 126% jump in EBIT to $2.8 million. This translated into margin expansion with EBITDA margin rising to 4.5% and EBIT margin reaching 2.7%, up from 1.2% in the prior corresponding period.

Revenue growth was more modest at 2.3%, reaching $103 million, but was accompanied by a significant improvement in gross margin, which climbed 270 basis points to 36.2%. These results reflect a disciplined focus on quality of earnings, cost control, and working capital management.

Strategic Retail Expansion and Integration

Central to Adore Beauty’s refreshed strategy is the expansion of its physical retail footprint, complementing its established online presence. The company successfully opened its first retail store in February 2025 at Westfield Southland in Victoria, with a second store scheduled for March at Watergardens. Plans are underway to open 4-6 additional stores across key Australian states including Western Australia, New South Wales, and Queensland throughout the calendar year.

Adore Beauty’s acquisition and integration of iKOU, a premium beauty brand, is progressing as planned. The initial integration phase is complete, positioning the company to leverage iKOU’s retail network and accelerate growth. The flagship iKOU store in Melbourne is set to open in April, marking a strategic expansion beyond its New South Wales origins.

Driving Margin Expansion Through Owned Brands and Retail Media

The company is targeting further margin improvement by growing its portfolio of owned brands and expanding retail media revenue streams, which are highly margin accretive. Investments in dedicated teams and technology platforms are underway to support these initiatives. Additionally, Adore Beauty is refining its promotional cadence and enhancing inventory management to sustain profitability gains.

Customer engagement remains a priority, with efforts to boost mobile app adoption, subscription services, and loyalty programs. Advanced data analytics and AI capabilities are being deployed to deepen customer insights and increase share-of-wallet across both online and in-store channels.

Financial Position and Outlook

Despite a reduction in cash reserves to $11.7 million from $32.9 million at the previous half-year, the company remains debt free and cash flow positive. The cash decrease primarily reflects the $20 million upfront payment for the iKOU acquisition and initial retail store capital expenditures. Adore Beauty reaffirmed its FY25 guidance, targeting an EBITDA margin of 4-5% and an EBIT margin of 2-3%.

CEO Sacha Laing expressed confidence in the company’s trajectory, highlighting the strength of the brand and the omni-channel model that integrates digital and physical retail experiences. The strategic plan aims for a 30% revenue growth and a doubling of EBIT margin over the next three years, leveraging the expanding retail network and enhanced customer engagement tools.