Revolution Beauty Group plc
("Revolution Beauty", the "Group", or the "Company")
HY2025 trading update
Revolution
Beauty (AIM: REVB), the multi-channel mass beauty innovator, is
today providing an update on trading for the six months ended 31
August 2024.
First half financial summary
Total
net sales in the first half of FY25 declined 20% to £72m (HY24:
£90m), driven by the planned simplification of the product
portfolio and the associated discontinuation of unproductive SKUs.
The decline also reflects significant stock clearance activity in
the first half of FY24.
By
contrast, the net sales from the Company's core range of SKUs grew
6% in the first half, with growth accelerating to 16% in the second
quarter versus the prior year.
Excluding
stock provisions, Underlying Adjusted EBITDA was £3.1m in the first
half (HY24: £3.5m(1)). Underlying sales channel margins
improved as efficiencies and cost savings were realised from
running a simplified brand portfolio. The Group's cost savings
programmes remain on track, with operating costs, excluding
marketing costs, decreasing 31% and administrative costs decreasing
25% year on year. Marketing increased 8% versus prior year, with
investments in brand marketing to underpin future growth of core
products.
As
previously disclosed, Revolution Beauty continues to focus on
clearing slow-moving discontinued inventory from previous years to
generate cash. As a result, the Group has determined that it is
necessary to recognise a one-off, non-cash stock provision of
£11.3m in the first half to reflect the Net Realisable Value of the
remaining old inventory, which will be excluded from Underlying
Adjusted EBITDA. This will allow management to realise value and
generate cash for future operations.
The
Company had cash balances of £6.8m at 31 August 2024 and a fully
drawn RCF of £32 million.
FY25 outlook
Reflecting
the Group's first half performance, Revolution Beauty is updating
its full year guidance. Sales for FY25 are now expected to decline
year on year at a slightly slower rate than in H1, with a return to
growth in the fourth quarter as a number of the Group's new
strategic growth initiatives take effect, and this growth is
expected to accelerate through FY26.
With
the continuing momentum in the underlying business, as gross
margins further strengthen in the second half of the year and as
cost saving programmes continue to deliver, Underlying Adjusted
EBITDA is expected to be at least in line with FY24 as previously
guided, prior to the one-off stock provision.
Strategic progress
Revolution
Beauty has continued to deliver on its Reigniting the Revolution
strategy during the first half. This includes encouraging progress
with existing and new retailers, through both digital and physical
channels.
The
Group has agreed a new relationship with DM Germany, Germany's
number one mass beauty retailer, where Revolution Beauty will
launch in more than 850 stores in January 2025. Revolution Beauty
is also expanding into 250 new Boots stores in the UK in October
2024. In the US, Walmart will carry a full assortment of Revolution
Beauty products in more than 1800 stores from January 2025, and its
new Amazon US shop, launched in HY25, is growing ahead of
plan.
Lauren Brindley, Revolution Beauty CEO, commented:
"In
the last six months, we have made great progress in our Reigniting
the Revolution strategy. We have reduced our SKU portfolio
significantly, enabling improved underlying gross margin
performance, on a core set of SKUs that are growing globally. This
year is a transformational year for the Company, as we focus on
simplifying the business, improving our operational efficiency and
positioning ourselves for profitable and sustained
success.
We
expect a return to growth in Q4, as we begin landing our new growth
initiatives, including a reinvigorated pipeline of make-up
innovation, the launch of our new Skincare range and the global
expansion of our budget brand, Relove. I remain highly confident
that our Reigniting the Revolution strategy will deliver
attractive, long-term, profitable growth."
Revolution
Beauty expects to announce its results for the half year ended 31
August 2024 in November.
(1) Underlying Adjusted EBITDA for
FY24 calculated as Adjusted EBITDA of £6.4m less stock provision
benefit of £3.1m
The
information contained within this announcement is deemed by the
Group to constitute inside information as stipulated under the
Market Abuse Regulation (EU) No. 596/2014 as it forms part of UK
domestic law by virtue of the European Union (Withdrawal) Act
2018.
For
further information, please contact:
Investor Relations
Lauren
Brindley, CEO
Neil
Catto, CFO
Investor.Relations@revolutionbeautyplc.com
Joint Corporate Brokers
Panmure
Liberum Capital Limited (NOMAD): Edward Thomas / Dru Danford / John
More
Tel:
+44 (0) 203 100 2222
Zeus:
Benjamin Robertson / Nick Cowles / Jordan Warburton
Tel:
+44 (0) 161 831 1512
Media enquiries
Headland
Consultancy: Matt Denham / Antonia Pollock
Tel:
+44 (0)20 3805 4822
Revolutionbeauty@headlandconsultancy.com