Merino & Co. reported steady progress in Q2 FY26 with growing demand from China and ongoing investments in brand and manufacturing, despite a tightening cash position.
- Quarterly revenue of $177,371 during strategic transition
- Secured purchase orders of approximately A$585,100 from Shanghai distributor
- Cash reserves declined to $1.17 million, covering 1.31 quarters of funding
- Board leadership renewal fully embedded, enhancing governance stability
- Focused investments in marketing, manufacturing, and organisational capability
Strategic Investments Drive Growth
Merino & Co., an Australian Merino wool apparel company, has reported its Q2 FY26 results, highlighting a period of strategic investment and international expansion. The company’s quarterly revenue stood at $177,371, reflecting a transitional phase as it rebalances its product, inventory, and channel strategies to better align with market demand.
Central to Merino & Co.'s recent efforts has been a deliberate push into the Chinese market. The company secured purchase orders totaling approximately A$585,100 through its Shanghai distribution partner, signalling early but promising traction in one of the world’s largest apparel markets. This momentum validates the company’s investment in brand development and international marketing.
Financial Position and Cash Flow Dynamics
Despite the encouraging order flow, Merino & Co.'s cash position has tightened, with cash on hand dropping to $1.17 million from $2.27 million in the previous quarter. This reduction is attributed to ongoing investments in manufacturing capacity, marketing, and staffing aimed at scaling operations to meet growing demand. Operating cash outflows for the quarter were approximately $0.9 million, resulting in an estimated 1.31 quarters of funding available without factoring in committed orders.
Management remains confident that the committed orders received in December and January will materially improve cash inflows in the near term. The company is also engaged in ongoing negotiations for further orders, which could provide additional financial support.
Governance and Leadership Stability
The Board’s leadership renewal is now fully embedded, providing a stable governance framework as Merino & Co. transitions from a phase of investment to one focused on execution and cash flow discipline. Board Chair Steve Woolley emphasised the company’s commitment to disciplined oversight and long-term shareholder value creation.
Managing Director Fiona Yue reiterated the company’s focus on aligning expenditure with confirmed demand, maintaining cost control, and ensuring operational readiness to deliver on international orders. This disciplined approach aims to balance growth ambitions with financial prudence.
Looking Ahead
Merino & Co. is positioning itself to strengthen its market presence through continued product development and enhanced organisational capability. While the company’s cash runway is currently limited, the combination of secured orders and ongoing negotiations provides a cautiously optimistic outlook. Investors will be watching closely to see how effectively Merino & Co. converts these opportunities into sustainable revenue growth and improved cash flow.
Bottom Line?
Merino & Co.'s next challenge will be converting growing international demand into sustained cash flow amid tight liquidity.
Questions in the middle?
- How quickly will the committed and potential orders translate into positive operating cash flow?
- What are the risks if international market expansion, particularly in China, slows or faces regulatory hurdles?
- Will Merino & Co. seek additional financing if cash reserves continue to decline before revenue growth materialises?