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Omni-channel retailer Adore Beauty Group’s (ASX: ABY) aggressive new growth strategy has started to pay off after reporting record underlying profit in FY25 that was aided by new store openings and wider margins.
The former pure-play online retailer delivered record normalised EBIT of $4 million for the full year, up 74.8 per cent compared with FY24.
This figure does not include one-off restructuring and acquisition costs of $2.5 million incurred during the year, which ultimately pushed Adore Beauty’s bottom line profit down 65 per cent to $761,000.
The strong underlying performance was delivered on a modest 1.6 per cent lift in revenue to $198.8 million and supported by a record gross margin of 35.3 per cent, up 190 basis points from a year earlier.
Adore Beauty opened five retail stores in Victoria, NSW and Western Australia during the year, building brand awareness as the group looks to build on its “high growth omni-channel strategy” that is targeting 30 per cent revenue growth and a doubling of EBIT margin over the next three years.
The new Adore Beauty stores complement the group’s network of iKOU organic beauty and wellness outlets which were acquired for $25 million and targeted for further expansion.
“Our strong FY25 performance in what was a challenging consumer market reflects significant progress in the delivery of our strategic plan,” says Adore Beauty CEO Sacha Laing.
“The quality of our earnings continues to improve, driven by investment in our consumer centric omni-channel model, enhanced AI online personalisation, reduced promotional cadence, iKOU acquisition and continued retail media growth - all underpinned by disciplined cost and inventory management.
“We are rapidly diversifying our operating model to significantly increase our addressable market, strengthen our core e-commerce business, and materially improve margins.”
Laing notes that in addition to the five new Adore Beaty stores opened since February this year, the group opened two iKOU retail stores with seven more group outlets scheduled for opening in the next four months set to boost Adore's physical store network to 15 by the end of 2025.
“Our higher-margin retail stores support brand awareness and customer acquisition with almost a third of in-store transactions being from new customers,” says Laing.
“Digitally enabled stores are also introducing new brands to our existing customers, with 78 per cent purchasing a brand in-store that they haven’t purchased online previously.”
Adore Beauty’s new customer acquisition returned to growth in the second half of FY25, up 4.9 per cent compared with a year earlier.
The company says the growth was achieved in tandem with lower customer acquisition costs of $59, down $15 on the previous year.
“Momentum has continued to build into the new financial year with trading in the first seven weeks up 9 per cent on the same period last year,” says Laing.
“Growth is being driven by continued improvements to our core online business, including adding more than 60 new brands, enhanced personalisation, a new loyalty program, more effective marketing, accelerated iKOU growth across all channels, as well as our new stores.”
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