Adore Beauty’s EBITDA Surges 68% as Retail Stores Multiply

Strong Financial Performance Amid Market Challenges

Adore Beauty Group Limited (ASX – ABY) has reported a standout financial year for FY25, showcasing significant improvements in profitability and operational efficiency despite a challenging consumer environment. The company posted a record EBITDA of $8.1 million, a 67.8% increase over the previous year, alongside a 74.8% rise in EBIT to $4.0 million. These gains were underpinned by a disciplined approach to cost and inventory management, as well as strategic investments in owned brands and retail media.

Margin Expansion and Revenue Quality Focus

While revenue growth was modest at 1.6% to $198.8 million, Adore Beauty emphasized reshaping revenue quality over volume. The gross margin expanded by 190 basis points to 35.3%, reflecting a shift towards higher-margin owned brands and a reduction in promotional activities. This focus on profitability rather than top-line growth signals a maturing business model aiming for sustainable earnings.

Retail Expansion and Omni-Channel Strategy

The Group accelerated its retail footprint, opening four new stores during FY25 and having three more under construction at year-end. These stores, including locations in Victoria, Western Australia, and New South Wales, are integral to Adore Beauty’s omni-channel strategy, enhancing brand visibility and customer acquisition. Notably, nearly a third of in-store transactions come from new customers, and 78% of in-store buyers purchase brands they had not previously bought online, highlighting the complementary nature of physical and digital channels.

Integration and Growth of iKOU

The acquisition and integration of iKOU, a complementary beauty brand, have progressed well, contributing to revenue growth across retail, direct-to-consumer, and wholesale channels. The combined retail network now includes five iKOU stores, with plans to open more in the coming months. Owned brands like iKOU, Viviology, and AB Lab are key drivers of margin expansion and support the Group’s mid-term profitability targets.

Outlook and Strategic Priorities

Adore Beauty enters FY26 with momentum, reporting a 9% increase in trading over the first seven weeks compared to the prior year. The company targets an EBITDA margin of 5-6% and an EBIT margin of 2.5-3.5% for FY26, reflecting continued margin improvement. Plans include opening 12-14 new retail stores, expanding the owned brand portfolio, and enhancing digital capabilities such as AI-driven personalisation and a loyalty program with over 440,000 members. The Group remains debt-free with a strong cash position of $12.7 million, providing flexibility to fund growth initiatives.