9th Oct 2024 09:44
(Alliance News) - Revolution Beauty Group PLC on Wednesday painted a mixed picture of trading as it
continues to cut costs in efforts to improve its fortunes.
The London-based cosmetics retailer said total net sales declined 20% to GBP72 million in the six months to August 31 from GBP90 million a year prior. This was driven by the planned simplification of the product portfolio and significant stock clearance activity a year ago.
By contrast, the net sales from the company's core range grew 6% in the first half, 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 was GBP3.1 million in the first half, down from GBP3.5 million a year ago.
Shares in Revolution Beauty fell 11% to 15.90 pence each in London on Wednesday morning.
In addition, the company said it would take a one-off, non-cash stock provision of GBP11.3 million in the first half to reflect the net realisable value of remaining old inventory.
This will be excluded from underlying adjusted earnings before interest, tax, depreciation and amortisation, the firm said.
Revolution Beauty said this reflected a continued focus on clearing slow-moving discontinued inventory from previous years to generate cash.
Revolution Beauty said its cost savings programmes remain on track, with operating costs, excluding marketing costs, decreasing 31% and administrative costs decreasing 25% year on year. But marketing costs increased 8% versus prior year, with investments in brand marketing.
The company updated guidance and now expects full-year sales to decline at a slightly slower rate than in the first half, with a return to growth in the fourth quarter. This growth is expected to accelerate through financial 2026.
As gross margin further strengthens in the second half of the year and as cost saving programmes continue to deliver, underlying adjusted Ebitda is expected to be at "least in line" with the year before as previously guided, prior to the one-off stock provision.
Chief Executive Lauren Brindley said: "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 the fourth quarter, 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."
By Jeremy Cutler, Alliance News reporter
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