Profit Falls 56% as Adore Beauty Invests Heavily in Omni-Channel Expansion

FY25 Financial Performance, Navigating Transition

Adore Beauty Group Limited closed FY25 with revenue of $198.8 million, marking a 1.6% increase over the prior year. However, profit before tax declined sharply by 56.4% to $1.23 million, primarily reflecting $2.55 million in one-off acquisition-related and restructuring expenses. Excluding these costs, the company’s normalised EBIT surged 74.8% to $4.0 million, delivering a 2.0% margin, signaling improved underlying profitability.

This financial outcome underscores a year of transition, balancing short-term cost impacts with strategic investments aimed at long-term growth. The company remains debt-free and ended the year with $12.7 million in cash, providing a solid foundation for its ambitious expansion plans.

Strategic Refresh and Omni-Channel Expansion

FY25 was pivotal for Adore Beauty’s strategic evolution. Under new CEO Sacha Laing, appointed in September 2024, the Group outlined a clear three-year roadmap targeting a step change in revenue, profitability, and customer growth by FY27. Key targets include exceeding $260 million in revenue, expanding gross margins by over 200 basis points, and achieving EBITDA margins above 8%.

Central to this strategy is the diversification from a predominantly online retailer to a leading omni-channel beauty platform. The acquisition of iKOU Holdings Pty Ltd in July 2024 bolstered the Group’s owned brand portfolio and retail presence. Integration efforts have been swift, with iKOU’s products now available across Adore Beauty’s platform and new retail stores opened in Berry (NSW), Melbourne CBD, and Sorrento (VIC).

In FY25, Adore Beauty opened five new retail stores across Victoria, Western Australia, and New South Wales, with plans to add 12–14 more in FY26, including entries into Queensland and South Australia. These stores have shown encouraging early performance, contributing to higher-margin sales and attracting new customers, with nearly a third of store transactions from first-time buyers.

Operational Efficiencies and Customer Engagement

The Group’s focus on operational discipline has yielded tangible benefits. Marketing expenditure became more efficient, dropping to 12% of sales, while customer acquisition costs fell by $15 to $59 per new customer in H2 FY25. The active customer base grew 2.6% to 837,000, supported by a 20.4% increase in the total contactable database to 1.35 million, enhancing future marketing reach.

Technological investments also played a key role, with AI-driven personalisation and faster site speeds boosting online conversion rates by 7.8%. The launch of the 'Adore Rewards' loyalty program, now with over 440,000 members, aims to deepen customer retention and increase share-of-wallet.

Governance and Leadership

Governance changes accompanied the strategic refresh. The Board welcomed retail veteran Iain Nairn as an independent Non-Executive Director in May 2025, bringing valuable omni-channel expertise. Co-founder James Height stepped down from the Board in November 2024 but remains involved as an alternate director, ensuring continuity of institutional knowledge.

Looking Ahead, Growth and Profitability Targets

Adore Beauty’s FY26 outlook is optimistic, with early trading up 9% year-on-year. The company expects revenue growth driven by owned brands, retail media, and expanding physical stores, alongside continued online momentum. Financial targets for FY26 include an EBITDA margin of 5–6% and EBIT margin of 2.5–3.5%, progressing towards the FY27 goals.

While the FY25 profit dip highlights the costs of transformation, the strategic investments position Adore Beauty to capture a larger share of Australia’s $13.9 billion beauty and personal care market. Execution risks remain, particularly in retail expansion and integration, but the company’s clear roadmap and improving margin profile offer a compelling growth narrative.