Australia | 11:16 AM
Following a more challenging FY26, Breville Group’s management is once again targeting double-digit earnings growth, with analysts prepared to back that ambition..
- Breville Group’s premium appliances withstand global uncertainties
- Coffee, Amerika and China remain crucial growth drivers
- Ongoing global expansion and AI productivity underpin aspirations
- Post FY26, management banks on double-digit earnings growth
- US retail consolidation seen providing a structural advantage
By Mark Woodruff
Breville Group ((BRG)), a designer, developer and marketer of premium kitchen appliances, is positioning for a return to double-digit earnings growth in FY27, supported by resilient consumer demand, ongoing international expansion, and new product launches.
Despite heightened global uncertainty, RBC Capital favours Breville's structural growth opportunities, net cash position and relatively limited exposure to Australian consumers. Circa 84% of FY26 sales came from outside the country, leaving only 16% for Australia.
RBC also points to strong US trading momentum at rival SharkNinja, suggesting demand for premium kitchen appliances remains healthy ahead of the crucial Black Friday-to-Christmas trading period.
While Breville shares have risen 12% year to date, RBC highlights their underperformance relative to SharkNinja and Italian-based De’Longhi, which have gained respectively 99% and 24%.
Following an operationally challenging FY26, the broker sees scope for Breville to return to double-digit earnings growth.
Ord Minnett shares this optimism, citing the company's strong balance sheet, including a net cash position of $104m, as supporting its growth outlook.
At last week's AGM, CEO Jim Clayton struck a cautiously optimistic tone, highlighting resilient premium consumer demand, strong coffee sales and continuing international expansion.
"The good news is the first quarter of FY27 was on plan", Clayton told shareholders.
While FY26 revenue increased 6.7%, management emphasised the contribution from new products and direct markets, alongside the resilience of premium consumers despite global economic uncertainty.
Ord Minnett agrees demand remains supportive, particularly across recently launched products and expanding international markets.
Expansion markets including China, South Korea, Mexico and the Middle East collectively delivered 74% revenue growth in FY26, with Morgan Stanley believing the performance in China “continued to ramp” in the first quarter of FY27.
Accounting for more than 50% of group sales, coffee remains the key growth driver, with recent product launches performing at or above expectations.
Breville’s product range includes espresso machines, grinders, ovens, air fryers, food processors, blenders and other cooking appliances. Brands include Breville, Sage (primarily in Europe), Baratza and Lelit.
Manufacturing is largely outsourced, allowing the company to focus on product innovation, marketing and distribution.
Importantly, management cautioned the critical Black Friday-to-Christmas trading period remains ahead.
Full-year FY27 guidance will be provided with half-year results in February.
Artificial intelligence offers opportunity
Looking further ahead, Clayton identified artificial intelligence as a potential driver of productivity and growth.
Breville is progressing beyond individual employee assistance towards broader team automation and redesigned business processes.
Management expects these initiatives to accelerate product development, improve marketing effectiveness and support geographic expansion, potentially strengthening operating leverage over time.
Understanding the business/US opportunity
Breville reports across two business segments.
The group’s principal growth engine, Global Product, generated $1.612bn, or 89% of FY26 revenue. This segment sells appliances designed and developed in-house through retailers, distributors and direct-to-consumer channels.
Distribution generated $199m, or 11% of FY26 revenue, through the marketing of third-party-designed appliances under licensing or distribution arrangements, including Nespresso coffee machines, and selected products carrying group-owned brands such as Kambrook.
Citi is increasingly confident US retail consolidation is providing Breville with a structural advantage, particularly through its expanding relationship with Best Buy.
The Americas accounted for approximately 55% of total revenue in FY26, Europe, the Middle East and Africa 23%, and Asia Pacific 22%. As mentioned, around 84% of sales originated outside Australia.
Key risks include weaker discretionary spending, tariffs, manufacturing and freight costs, currency movements and competition from established appliance brands.
Morgan Stanley also acknowledges the risks associated with increasing operational complexity, particularly in global logistics, but highlights Breville’s successful manufacturing diversification as evidence of the company's ability to navigate disruption.
The broker also suggests inventory accumulated early in FY27 to provide a buffer against potential supply chain interruptions.
Citi anticipates some margin pressure from logistics disruptions but believes existing inventory and value-chain provisions should protect near-term earnings.
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