Sparks

In a H125 trading update to 31 August, Revolution Beauty reported a 20% fall in net sales to £72m as it streamlines its product portfolio as part of its ‘Reigniting the Revolution’ strategy, reducing the number of unproductive SKUs with notable stock clearance. The company’s core range however delivered 6% y-o-y growth with an acceleration in Q225. The simplification of the portfolio has enabled Revolution Beauty to generate cost efficiencies through better sales channel margins. Consequently, underlying adjusted EBITDA came in 11% lower y-o-y at £3.1m (H125: £3.5m), although at an improved margin of 4.3% (H125: 3.9%). Management has recognised a one-off, non-cash stock provision of £11.3m to reflect the net realisable value of old inventory, however this is excluded from the underlying adjusted EBITDA figure. At H125-end Revolution Beauty had cash of £6.8m and a fully drawn RCF of £32m.

Revolution Beauty signed a number of contracts in the period highlighting positive momentum in the commercial expansion. The company will launch in 850 DM Germany stores from January, 250 new Boots stores in the UK from October 2024, while Walmart will have a full range of Revolution Beauty products in over 1,800 stores from January 2025.

Management has reiterated full year guidance, anticipating FY25 sales to decline at a lower y-o-y rate than in H125 with a return to growth in Q4. Gross margin improvement is expected to improve and Revolution Beauty continues to expect FY25 underlying adjusted EBITDA to be in line with the prior year, before the one-off stock provision.