Revolution Beauty Group PLC – REVB – Interim Results

Revolution Beauty Group PLC – REVB – Interim Results

Revolution Beauty Group plc (AIM: REVB), the multi-channel mass beauty innovator, today announces its results for the six months ended 31 August 2021 ("H1" or the "Period")

 

 

Financial Highlights

 

-     Group revenue up c.39% to £78.6m, providing a platform for growth ahead of seasonal peak trading

 

-     Performance driven by international Store Group growth across a number of categories; North America Store Groups +102%; UK Store Groups +78% and ROW Store Groups +56% as stores rebounded from Covid-19 related trading restrictions

 

-     Strong performance across Revolution Beauty brands, including Makeup Revolution up c.53% versus the first half of last year

 

-     Gross Margin increased to 47.9%, ahead of 47.7% in the same period last year primarily driven by underlying product margins and customer mix. This is despite the increased costs pressures on freight which have successfully been offset in H1. The Group is working collaboratively with suppliers to continue to mitigate them in H2

 

-     Against very strong prior year comparatives, as a result of a significant shift to Digital during strict Covid-19 lockdowns, Digital sales were up 53% against two years ago

 

-     Adjusted EBITDA increased by c.39%, compared with the first half of last year, to £5.1m

 

-     Net cash of £17.6m post restructuring of the Group's balance sheet on its IPO on AIM in July 2021

 

 

£'M

H1 22

H1 21

Change

Growth

Net Revenue

78.6

56.6

22.0

38.8%

Gross Profit

37.6

27.0

10.6

39.3%

GM%

47.9%

47.7%

0.2%

Adjusted EBITDA

5.1

3.7

1.4

38.6%

Adjusted EBIT

0.1

(2.2)

2.3

n/a

Loss After Tax*

(15.2)

(6.0)

(9.2)

n/a

£'M

H1 22

FY 21

Change

Cash

21.8

5.6

16.2

Net Cash/(Debt)

17.6

(68.0)

85.6

 

Adjusted EBITDA and Adjusted EBIT are alternative performance measures used by management to gauge the underlying performance of the business, adjusting for certain non-cash, non-recurring and normalising items that are not considered to form part of underlying performance (note 7).

*inclusive of exceptional IPO costs and interest on debt, which was repaid on IPO

 

Operational Highlights

 

-     Significant progress in creating a globally balanced business; building international presence online and in-store

 

-     Acceleration of growth and brand presence in North America; now the Group's largest geography in stores, representing 26% of sales, with further opportunities to come

 

-     New partnerships with blue chip retailers underline appeal of own Makeup Revolution brand; with agreements signed to launch into 1,800 US Target stores in the first quarter and 350 UK Boots stores in the fourth quarter

 

-     Zalando now within our top 3 Digital Partners demonstrating an excellent consumer fit for the Revolution Beauty brand and its categories

 

-     Strong performance in the Group's own DTC; revolutionbeauty.com customers increased by over 200,000 in the Period and is performing particularly well in the US, Australia and New Zealand 

 

-     Further brand innovation through launch of Revolution Haircare Plex in February 2021 with retail roll out across 2022. Well-advanced in preparing to launch Revolution Man next year

 

-     A powerful and cost-effective marketing strategy; we are one of the fastest growing brands on TikTok and now have a global social media following of over 6.8m

 

-     Increased service levels through improved operational execution and building stock holdings to mitigate supply chain challenges

 

Post-Period End Highlights and outlook

 

-     Acquisition of skincare producer Medichem Manufacturing Limited (now named Revolution Beauty Labs Ltd) for c.£27m (subject to completion accounts), to vertically integrate the Group and improve productivity, cost base and margins over the long-term

 

-     The Group has seen an acceleration in sales as we have progressed in the third quarter, which is the start of the beauty industry's seasonal peak. This has been driven by a strong Halloween and a promising start to the Christmas trading period with a good uptake of the Revolution Beauty advent calendars and festive products. We believe this acceleration will now continue into the fourth quarter

 

-     We are pleased to announce today the launch of Makeup Revolution with a major new US customer commencing with a roll out into 2,800 of its mass-market US retail stores in the fourth quarter. We also plan the launch of Revolution Haircare into 870 Target stores in the US early next year

 

-     In the UK, further category expansion and enhanced in-store distribution is also due in Q4, with our planned roll-out of Makeup Revolution across 350 Boots stores

 

-     Our digital channels have also returned to growth with acceleration in the third quarter. Further digital expansion will continue in the fourth quarter with the launch of Revolution Beauty products by Next, Fashion Nova, River Island and Forever 21

 

-     New category launches planned throughout the second half of the year, including Fragrance and Derma Skin

 

-     Given the sales acceleration in the third quarter and the significant new store roll outs agreed in the US and UK for the fourth quarter, we remain confident of meeting market expectations for the full year, though remain mindful of ongoing global volatility caused by the global pandemic and supply chain disruptions.  We have been actively managing cost pressures related to global supply chain. Through careful forward planning, strong inventory management and working collaboratively with our suppliers, we have successfully offset these cost pressures in H1. We continue to take action to mitigate costs into H2

 

Adam Minto, Chief Executive, said:

 

"This is a momentous year for Revolution Beauty. We have continued to focus on accelerating the delivery of our strategy to expand distribution of Revolution Beauty brands around the world. We doubled sales in the US, grew our global community to almost 7 million, and floated on the London Stock Exchange.

 

In the first half of the year, we grew sales by c.39%, with adjusted EBITDA also up c.39%. Particularly pleasing was the operational progress we made to match our sales growth. We expanded our global distribution launching our Makeup Revolution Brand into 1,800 US Target stores in H1, increased our direct-to-consumer customer figure by over 200,000 and signed agreements to launch into 2,800 US Stores from Q4, and 350 UK Boots stores from February 2022.

 

Our digital first strategy underpins our success. Our ability to anticipate trends through our social and influencer-led marketing approach, coupled with our speed to market, ensures we are continually innovating ahead of the market.  This approach means our DTC digital customer base is growing strongly, while our in-store distribution network grows in our key markets of the US and UK, as more retailers come to us for our market-leading innovations.

 

As anticipated at our trading update in October, we continued the strong momentum in the first half into the seasonal peak of beauty in the third quarter, with sales growth across online and in-store, driven by Halloween and the start of Christmas trading. We remain confident of meeting market expectations for the full year, though we continue to be mindful of ongoing volatility and disruption caused by the pandemic. The medium and long-term growth drivers and opportunity in mass beauty remain strong, and we are confident in our strategy, the resilience of our business model and our differentiated products as Revolution Beauty continues to win new customers around the world."

 

Analysts and Investors

 

There will be a webinar, followed by a Q&A, for equity analysts at 09:30am GMT today, hosted by CEO Adam Minto and CFO Andrew Clark. Those wishing to join should follow the link below to register or contact [email protected].

 

https://webcasting.brrmedia.co.uk/broadcast/617a5c15df7b150b81e95858

 

Those who would like to participate in the Q&A can submit questions via the webcast or, alternatively, please dial in to the conference call facility via the number below. When prompted, provide the confirmation code or event title.

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