Adore Beauty Group reported solid revenue growth driven by its omni-channel strategy and retail expansion, but profits fell sharply due to margin pressures and increased costs. The company opened 10 new stores and secured fresh financing, signalling a bold growth phase.
- Revenue up 8.7% to $111.9 million in H1 FY26
- Profit after tax down 69.9% to $189,000
- Underlying EBITDA rises 14.5% to $4.14 million
- Opened 10 new retail stores across Adore Beauty and iKOU brands
- Secured $7.2 million asset finance facility; no dividends declared
Revenue Growth Amid Expansion
Adore Beauty Group Limited has reported a robust 8.7% increase in revenue for the half-year ended 28 December 2025, reaching $111.9 million. This growth was largely fuelled by the company’s omni-channel strategy, which blends online sales with a growing physical retail presence. The period saw the opening of 10 new stores across its Adore Beauty and iKOU brands, expanding its footprint to 16 stores in total.
Profitability Challenges
Despite the top-line momentum, profit after tax plunged by nearly 70% to just $189,000. The sharp decline reflects margin pressures from heavy promotional activity, particularly during Black Friday, and increased costs related to store rollout and restructuring. Gross margin contracted by 120 basis points to 35.0%, highlighting the cost of aggressive sales campaigns and expansion investments.
Underlying Earnings and Cash Flow
Underlying EBITDA, a key performance metric excluding non-core items, improved by 14.5% to $4.14 million, delivering a margin of 3.7%. This suggests operational improvements and disciplined cost management partially offset margin erosion. Operating cash flow remained positive, with a closing cash balance of $8.2 million, despite a $4.5 million reduction compared to the prior period due to capital expenditure on new stores.
Strategic Financing and Board Changes
To support its growth trajectory, Adore Beauty secured a new $7.2 million asset finance facility with Commonwealth Bank of Australia shortly after the reporting period. On the governance front, Jason Murray was appointed Non-Executive Chair in November 2025, succeeding Marina Go AM. These moves underscore a strategic focus on scaling the business while maintaining financial flexibility.
Outlook and Market Position
Adore Beauty’s expansion into physical retail complements its strong online presence, positioning it well in the competitive beauty and personal care market in Australia and New Zealand. However, the significant profit decline raises questions about the sustainability of margin recovery and the financial impact of rapid store growth. The absence of dividends signals a reinvestment phase, prioritising growth over shareholder returns for now.
Bottom Line?
Adore Beauty’s growth story is clear, but the path to sustained profitability remains a critical watchpoint.
Questions in the middle?
- Will margin pressures ease as new stores mature and promotional intensity normalises?
- How will the new asset finance facility impact the company’s capital structure and cost of capital?
- What is the strategic rationale behind the rapid retail expansion, and how will it affect long-term profitability?