Revolution Beauty has posted a drop in first-half sales and profits as it implemented its strategy to improve its long-term performance.
The retailer’s total net sales over the six months to 31 August declined by 20% to £72m, impacted by a planned simplification of its product portfolio and the associated discontinuation of “unproductive SKUs”. The fall also reflected significant stock clearance activity in the same period last year.
However, the company noted that its core range of SKUs grew 6% in the first half after growth accelerated to 16% in the second quarter.
Excluding stock provisions, Revolution Beauty’s underlying adjusted EBITDA slipped from £3.5m to £3.1m. Underlying sales channel margins were said to have improved as efficiencies and cost savings were realised from running a simplified brand portfolio. The group also highlighted that its cost savings programme remained on track, with operating costs decreasing 31% and administrative costs down 25%. However, marketing increased by 8% after the retailer invested in brand marketing to underpin the future growth of its core products.
As a result of the first half performance, Revolution Beauty has updated its full-year guidance. Annual sales are now expected to decline at a slightly slower rate than in the first half, with a return to growth expected in the fourth quarter as its new growth initiatives take effect. This growth is expected to accelerate through the following financial year.
As part of its ‘Reigniting the Revolution’ strategy, the group has made progress with existing and new retailers through both digital and physical channels.
A new deal has been agreed with DM Germany, the country’s number one mass beauty retailer, where Revolution Beauty will launch in more than 850 stores in January 2025. It is also expanding into 250 new Boots stores in the UK this month. In the US, Walmart will carry a full assortment of Revolution Beauty products in more than 1,800 stores from January 2025. And its new Amazon US shop is said to be 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.”
