This article first appeared on GuruFocus .
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Total Sales:Record $148.9 million, up 8.4% year-on-year on a statutory basis.
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Like-for-Like Sales:Increased 7.8%, with store like-for-likes up 6.4%.
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Online Sales:Record $12.7 million, up 16.9%, with online penetration rising to 8.5% of sales.
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Gross Profit:$96.2 million, up 10.1% on a statutory basis.
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Gross Margin:Improved to 64.6%, 100 basis points ahead of last year on a statutory basis.
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Underlying EBIT:$8.9 million, up 15.6% versus the prior corresponding period.
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Cash Position:Closed with $18.3 million in cash and no debt.
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Inventory:Closed at $21.2 million, up $3.9 million versus the prior corresponding period.
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Store Network:Ended FY26 with 144 stores, including two online stores, after exiting 12 underperforming stores.
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Sales per Store:Increased by 8% year-on-year.
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Average Transaction Value (ATV):Total ATV rose 8% to $52; member ATV increased 9% to $60.
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Dusk Rewards Members:Record 768,000 members, with member purchases accounting for 59% of total sales.
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Member Sales:$88 million, up 13% on the prior corresponding period.
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Bath and Body Category:Grew to represent 6.4% of the sales mix, up from 5.3% in FY25.
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Q1 FY27 Trading:Comparable sales growth of 5.4% for the first seven weeks.
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Release Date: August 20, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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Record total sales of $148.9 million, up 8.4% year-on-year, with like-for-like sales growth of 7.8%.
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Gross margin improved to 64.6%, up 100 basis points, driven by freight efficiencies and FX tailwinds.
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Online sales hit a record $12.7 million, up 16.9%, with penetration rising to 8.5%.
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Dusk Rewards membership reached a record 768,000, with member sales up 13% and active members growing 18%.
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Successful rollout of the Afterglow store concept, delivering 22% like-for-like sales growth in pilot stores.
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Strong start to FY27 with comparable sales growth of 5.4% and gross margin dollars up 8.7% in the first seven weeks.
Negative Points
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Underlying EBIT growth of 15.6% was below sales growth, impacted by strategic reinvestment and higher costs.
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CODB increased by $7.1 million, including $3.1 million of strategic reinvestment, with inflationary cost growth of 5.2%.
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Inventory levels rose by $3.9 million to $21.2 million, reflecting deliberate investment but tying up cash.
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Cash balance declined by $1.9 million to $18.3 million, partly due to inventory investment.
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Final dividend was reduced to 1.06 cents per share, reflecting prudence amid ACCC proceedings and growth investments.
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ACCC legal proceedings regarding button battery products sold in 2023-2024 pose regulatory and financial uncertainty.
Q & A Highlights
Q: Can you provide more detail on the drivers behind the strong double-digit like-for-like sales growth in the second half? A: Vladislav Yakubson (CEO): The 14%+ sales growth in the second half was driven by a product-led strategy anchored by the successful signature range relaunch, which provided a more consistent customer base. The first trial of a Valentine's Day collection sustained momentum between January and February. Strategically investing in stock to ensure omnichannel availability of core lines, combined with a balanced promotional approach and exclusive member offers, helped excite existing members and attract new customers.
Q: Given the strong gross margin performance in the trading update, what are the key factors shaping your positive outlook for 1H FY27? A: Gordon Squire (CFO): The biggest driver of gross margin is tactical promotions. The team's execution of member-only offers reduced the depth of promotions, which was positive. FX tailwinds from hedging at high 60s to low 70s have been a significant benefit. The success of the signature range allowed us to accelerate its rollout to stores faster than planned, driving stronger margins on new products. Finally, the successful transition to a new distribution network with a more efficient local transport carrier has flowed through to improved margins.
Q: How are you planning to test the three to five stores for the South African expansion, and when should we expect to see the associated costs flow through? A: Vladislav Yakubson (CEO) & Gordon Squire (CFO): Strategically, we plan to concentrate the pilot in one city, at most two, to learn effectively. We have completed due diligence with local experts in retail, operations, and logistics. We intend to enter in calendar 2027 and will work with a partner rather than setting up our own warehouse. There are no material costs yet, but we expect to provide more color in the February announcements. The cost of entry is far lower than other Western markets, and we do not expect material costs to be incurred.
Q: Loyalty member numbers were up double-digits, but loyalty revenue was flat. Was that due to pricing or the timing of new members joining? A: Vladislav Yakubson (CEO) & Gordon Squire (CFO): The joining fee has not changed. The flat revenue is due to the IFRS 15 accounting standard, where loyalty revenue is recognized over two years, creating a lag. The record growth in members from 653k to 768k will flow through to revenue over the next 12-24 months. The success is driven by the new CRM platform, which allows for more personalized, member-exclusive offers, motivating retention and acquisition.
Q: How should we think about CapEx going forward, given the international expansion and the rollout of Afterglow stores and mini-refurbishments? A: Gordon Squire (CFO): CapEx was up circa 10% year-on-year, tied to the Afterglow rollout. We are planning for 10+ Afterglow stores each financial year, which will see CapEx investment ramp up, but not to a material nature. The timing of store fit-outs can cause some delays, but the investment is focused on high-return opportunities.
Q: Should we be looking at more Australian content in your products, especially given the move into South Africa? A: Vladislav Yakubson (CEO): Our sourcing and supply chain strategy will continue to explore Australian manufacturing opportunities. We have a current Father's Day range that is fully made in Australia. While most ingredients are Australian, some components come from overseas, which is product-specific. The business's manufacturing capability is far superior to what it was historically, and we will consider the product strategy for the South African market before entry.
Q: The final dividend seems low. What is the future philosophy on dividends? A: Vladislav Yakubson (CEO): A dividend is a point in time and should not reflect past or future dividends. The board is being prudent with cash management due to the current macro conditions, the ongoing ACCC Federal Court case, and growth opportunities. We are reinvesting in the business to fund its evolution over the next 12-24 months, which is why the dividend was set at this level.
Q: How are you managing the impact of the 4.75% wage rate growth from the Fair Work Commission? A: Gordon Squire (CFO): We cannot avoid the mandatory wage increase, but we are managing it through store portfolio optimization. Closing 12 underperforming stores has delivered a material wage improvement across the business. We also reward employees with commissions and bonuses tied to performance, which drives productivity. The focus is on improving productivity in each store and ensuring we get a strong return on our wage investment.
Q: Can you provide more color on the store network optimization and what the portfolio might look like in a few years? A: Vladislav Yakubson (CEO) & Gordon Squire (CFO): The Afterglow concept is performing exceptionally well, with like-for-like sales up circa 22% at the Westlakes and Macarthur stores. We see a lot more Afterglow stores in the network, and the refurbishment program is as important as new store openings. We have had a successful turnover, closing 12 stores and opening 6, with the new stores returning much higher margins. We expect another 12-18 months of this optimization, though not to the same net reduction extent.
Q: With the Afterglow rollout, what are your expectations for like-for-like sales performance from the mini-refurbishments? A: Vladislav Yakubson (CEO): The mini-refurbishments are a commercial outcome to take cues from the full Afterglow fit-out at a much lower spend. We expect single-digit sales growth, not to the extent of full refurbishments. They serve a dual strategy: driving return on investment and acting as a defense to remain relevant in C-grade centers where a full refurbishment may not be justified. We have a couple in trial and will accelerate the rollout if they perform well through the Christmas period.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
