Revolution Beauty returns to profit

26th Jun 2024 09:19

(Sharecast News) - Revolution Beauty said on Wednesday that it has swung into the black, as it looked to move on from a turbulent period.

The AIM-listed mass beauty specialist said revenues in the year to 29 February rose 2% to £191.3m. Operating costs were down 9% at £75.8m while the gross margin improved nearly 6 percentage points to 46.2%.

Adjusted earnings before interest, tax, depreciation and amortisation were £12.6m, compared to last year's £7.5m loss, while pre-tax profits were £11.4m. A year previously, pre-tax losses were £33.9m.

In 2022, BDO refused to sign off Revolution's accounts, leading to the shares being suspended in September for nine months.

Concerns were raised about personal loans made by founder and former chief executive Adam Minto, who oversaw the brand's rapid ascent before it was rocked by the accounting issues. He stepped down in November 2022, although remains a shareholder.

In February 2024, Revolution struck an agreement with Minto following a two-year probe. While neither side has admitted liability, Minto has agreed to pay nearly £3m over six years.

Lauren Brindley, Revolution's recently installed chief executive, said: "The 2024 full year was a year of great strategic and financial progress following a challenging two years."

Revolution said it had reduced inventory by 32% as part of a wider overhaul of the business, which included cutting distribution costs, focusing on core product categories and shake up of the board.

Looking to the current year, it warned that revenues were set to decline year-on-year in the first half at a slightly higher rate than in the second half of 2024, on the back of stock clearance last year and the refocused portfolio.

It continued: "With a reinvigorated innovation pipeline and opportunities to expand our offering and distribution network, we expect to return to revenue growth in the second half.

"Benefiting from the group's ongoing cost savings programme, adjusted EBITDA is expected to be at least in line with 2024, with a significant weighting to the second half."

Brindley, who took over as chief executive in September, said: "I am excited about the potential of our reinvigorated pipeline of innovation and the number of opportunities to expand our retail distribution globally."