AIM-listed Revolution Beauty Group (LON: REVB) announced its interim results for the six months ended 31 August 2024, sending its shares lower after revealing a significant decline in revenue and gross profit.
Revolution Bauty's stock declined by around 4.8% Tuesday, adding to its drop for the year-to-date, which stands at around 60%.
In H1, REVB revenue declined by 20% to £72.4 million, which it put down to the planned simplification of the product portfolio and the discontinuation of unproductive SKUs.
Meanwhile, gross profit plunged by 48% to £23.2 million, resulting in a 17.4 percentage point drop in gross margin. The company's GAAP loss before tax came in at £10.9 million, declining from a £11.4 million profit in the same period last year.
The company attributed the revenue decline to the streamlining of its product range and the clearance of excess inventory from the previous year. However, it highlighted encouraging growth in core SKUs, with a 6% increase in H1 25 and an accelerated 16% growth in Q2.
Revolution Beauty has been implementing its “Reigniting the Revolution” strategy, which involves rationalizing its portfolio, improving operational efficiency, and focusing on core SKUs.
The company said it has made progress in these areas, including reducing distribution and administrative costs and improving service levels.
Despite the challenges faced in the first half, Revolution Beauty remains optimistic about its future prospects. The company expects sales to decline at a slightly lower rate in the second half of the year and return to growth in the fourth quarter.
Additionally, it anticipates underlying adjusted EBITDA will be at least in line with FY24.
Lauren Brindley, Group Chief Executive Officer, 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.
Brindley added that since launching its new strategy in February, the company has substantially cut a long tail of unproductive SKUs, improved operational delivery and made progress with its cost savings programmes.
“Consequently, we now have a core portfolio that is growing globally with a significantly improved underlying gross margin,” said Brindley.
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