Revolution Beauty struggles with excess stock as turnaround on horizon
Revolution Beauty reported another drop in revenue after a tricky few years, although it is eyeing 2025 for a resurgence with its ‘core’ groups of brands.
Group revenue fell 20 per cent, driven by the “planned simplification of the product portfolio and the discontinuation of unproductive SKUs [stock]”, Revolution said.
It said revenue growth from its ‘core’ range of stock – 1.058 products – was six per cent in the first half of the year, and 16 per cent in the second quarter.
Earnings before interest, tax, depreciation and amortisation (EBITDA) rose by 18 per cent, partly due to a wide-ranging cost-cutting programme which cut distribution costs by 33 per cent and administrative costs by 30 per cent year on year.
Gross profit nearly halved, going from £44.7m to £23.2m, while the company’s operating loss widened from £0.5m to £9.8m.
“This is a year of transformation for Revolution Beauty, and our performance in the first half reflects the steps we have taken to position the group for long-term, profitable growth,” Lauren Brindley, group chief executive officer, said.
“Since launching our new strategy in February, we have substantially cut a long tail of unproductive SKUs, improved our operational delivery and made good progress with our cost savings programmes… we now have a core portfolio that is growing globally with a significantly improved underlying gross margin,” she added.
The update comes after a difficult period for the firm. Revolution’s share price has tumbled 53 per cent so far this year and is down 91 per cent since the firm floated on the London Stock Exchange in July 2021.
The firm reiterated its guidance that sales for the full year were expected to decline year on year – albeit at a slightly lower rate than in the first half of the year – with a return to growth in the fourth quarter.
It expected “several” of the company’s new strategic growth initiatives to take effect, and said this growth would “accelerate through [next year]”.
“We have a strong pipeline of growth initiatives, including new and expanded retailer relationships, a reinvigorated pipeline of make-up innovation, the launch of our new skincare range and the global expansion of our budget brand, Relove.
“As these initiatives start to take effect, we expect a return to growth in [the fourth quarter] and anticipate that this will accelerate through [the next financial year]. With good momentum in the underlying business, I remain highly confident in the Reigniting the Revolution strategy and in our ability to become a top five mass beauty brand,” Brindley added.