Lark Distilling took a A$15.49 million inventory write-down after acquired whisky stocks sold slower than expected.

Lark Distilling said Tuesday that net sales rose 15.1% in its 2026 fiscal year, but the Australian whisky producer also took a large non-cash write-down on previously acquired whisky stocks after admitting those inventories had been selling more slowly than expected.

The company reported a A$15.49 million inventory write-down for the year ended June 30, tied mainly to acquired maturing whisky from earlier deals. Lark said the adjustment brought the carrying value of that stock closer to the value of whisky it produced itself. The charge does not involve an immediate cash outflow, but it sharply reduced reported earnings and highlighted the financial risk of holding large aging inventories in a slower market.

After the write-down, Lark still held total inventories of A$49.44 million. That included about 2.4 million liters of maturing whisky at 43% alcohol by volume, which the company said supports future growth across domestic, export, travel retail and direct sales channels.

Net sales, which Lark reports after excise, increased to A$18.00 million from A$15.63 million a year earlier. The gain of A$2.37 million was driven by growth across its core channels and supported by the launch of new product ranges. The company sells mainly whisky, along with a smaller gin portfolio, but it did not disclose volumes sold in liters, cases or country-by-country breakdowns.

The sales increase did not translate into stronger margins. Gross profit fell 1.7% to A$9.88 million from A$10.05 million. Lark’s normalized gross profit, which excludes fair value adjustments, rose 7.5% to A$10.90 million, but its normalized gross margin dropped to 60.5% from 64.8%, a decline of 4.3 percentage points.

The company said the margin pressure came largely from channel mix and product mix. Sales growth was strongest in export and global travel retail, which carry lower margins than Lark’s direct-to-consumer business. The company also said changes in its portfolio architecture helped lift sales but weighed on profitability.

Lark’s operating EBITDA loss widened to A$4.49 million from A$4.19 million, an increase of A$301,000 or 7.2%. Statutory EBITDA fell to a loss of A$18.95 million, compared with a A$5.92 million loss a year earlier, after including the inventory write-down and a separate A$20.7 million non-cash goodwill impairment.

The strongest top-line growth came from international channels. Export sales rose 69% to A$1.9 million, driven mainly by China. Based on that growth rate, comparable export sales in the prior year were about A$1.12 million. That implies an increase of roughly A$776,000, though the prior figure is an estimate because it is derived from a rounded percentage.

Lark said it completed its first shipment to China during the fiscal year and is now present in 10 Asian markets. Global travel retail sales rose 43% to A$2.2 million, helped by new exclusive ranges and airport distribution. The company said its products are now available in all four terminals at Singapore’s Changi Airport, and it upgraded a permanent display at Sydney Airport.

Combined export and travel retail sales reached A$4.1 million, up from A$2.7 million a year earlier. That was an increase of A$1.4 million, or 53.7%. Even with that growth, those international channels still represented less than a quarter of group net sales for the year.

Domestic channels also grew, though at a slower pace. Direct-to-consumer net sales rose 10.0% to A$7.5 million. Within that segment, ecommerce sales climbed 21.5% to A$3.4 million, while hospitality sales edged up 1.9% to A$4.1 million. Lark said hospitality growth came despite a temporary cellar door closure tied to redevelopment work. Business-to-business sales through distributor Spirits Platform increased 7% to A$4.9 million, helped by the rollout of the company’s new Signature range.

The company finished the year with A$14.3 million in cash and cash equivalents and no debt. It said that balance sheet position gives it room to keep investing in brand building, new distribution and commercializing its whisky bank. Lark also said it has access to an undrawn A$5.0 million debt facility.

Cash, however, was down from A$23.1 million a year earlier. Net cash used in operating activities rose to A$5.81 million from A$2.92 million. Lark said that reflected continued investment in operations and growth initiatives, along with temporary working capital movements around year-end. Trade receivables increased by A$3.05 million, which the company said was concentrated in a small number of balances and largely reversed shortly after June 30.

Property, plant and equipment rose to A$14.08 million from A$13.47 million after investment in Lark-owned hospitality venues and the Pontville distillery. The company said the Pontville redevelopment is complete and that no further capital is required to fund current growth plans or capital expenditure.

Lark’s results point to a business that is still expanding its sales base, especially in Asia and airport retail, while also adjusting to the lower turnover of acquired whisky stocks. The inventory write-down reflects management’s reassessment of earlier assumptions about how quickly that whisky could be sold through the market. At the same time, the company is betting that broader distribution, a new product range and its large maturing whisky reserve will support future revenue growth.