Amidst a strategic overhaul, Revolution Beauty reports a substantial loss for the first half of the year.
- The beauty brand’s sales fell by 20%, leading to a pre-tax loss of £10.9 million.
- A new strategy initiated a reduction of brands and product lines in a bid to streamline operations.
- CEO Lauren Brindley expresses optimism about long-term growth despite current financial setbacks.
- The company anticipates a potential return to growth in the final quarter of the fiscal year.
>Revolution Beauty has reported a significant financial setback as it navigates a transformative period. The company disclosed a pre-tax loss of £10.9 million for the first half of the year ending 31 August. This marks a downturn from a £400,000 profit in the previous year, compounded by a 20% drop in sales to £72.4 million. The decline is attributed to deliberate strategies focused on simplifying its product portfolio and phasing out underperforming stock-keeping units (SKUs). Large-scale stock clearance activities were also cited as a contributing factor to the financial performance.
In February, Revolution Beauty implemented a ‘Reigniting the Revolution’ strategy aimed at refining its business model. The plan sought to narrow its expansive portfolio from seven brands across eleven categories to a more focused three brands within seven categories. The intention was to create a more efficient and profitable core offering that better serves its market.
CEO Lauren Brindley stated, “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.” She highlighted substantial cuts to a “long tail of unproductive SKUs”, improvements in operational delivery, and progress in cost-saving measures as key achievements in the initial phases of their strategy. The restructuring efforts have started to enhance the underlying gross profit margin, which improved by 20 basis points, along with a slight increase in underlying adjusted EBITDA from £3.3 million to £3.9 million.
Looking forward, Revolution Beauty aims to mitigate its decline in sales, forecasting a slower rate of decrease in the second half of the year. The company remains hopeful for a return to sales growth in the fourth quarter, as they continue their efforts to strengthen their market position.
While facing a challenging financial situation, Revolution Beauty is optimistic about its strategic changes paving the way for future growth and stability.
