(Sharecast News) - Revolution Beauty reported a drop in first-half sales and profits on Wednesday but said sales were set to return to growth in the fourth quarter.
In an update for the six months to the end of August, the makeup and cosmetics company said total net sales fell 20% to £72m, driven by the planned simplification of its product portfolio and the associated discontinuation of unproductive SKUs. The drop in sales also reflects "significant" stock clearance in the first half of the year, it said.
Net sales from the company's core range of SKUs rose 6%, with growth accelerating to 16% in the second quarter versus the prior year.
Excluding stock provisions, underlying adjusted earnings before interest, tax, depreciation and amortisation fell to £3.1m from £3.5m in the same period a year earlier.
Revolution also said it would need to recognise a one-off, non-cash stock provision of £11.3m in the first half.
Looking ahead, the company struck a more upbeat tone, saying it now expects FY25 sales are now expected to decline year-on-year at a slightly slower rate than in the first half, with a return to growth in the fourth quarter as new strategic growth initiatives take effect. This growth is expected to accelerate through FY26.
It also said that underlying adjusted EBITDA is expected to be at least in line with FY24 as previously guided, prior to the one-off stock provision.
Chief executive Lauren Brindley said: "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."
At 0930 BST, the shares were down 14% at 15.42p.