LONDON (ShareCast) - (Sharecast News) - Shares in Revolution Beauty tanked on Tuesday, after the AIM-listed firm warned that the year had got off to a slower-than-expected start and it was now in talks with its banks.
The cosmetics and skincare brand said it had expected to see double digit net sales declines in the first quarter, as it continued to feel the impact of a major overhaul of the product portfolio.

However, updating on end of year trading, Revolution said March and April had been "softer than planned, due primarily to performance weakness in pure play digital retailers and weakened consumer confidence impacting US performance.

"Management considers both impacts as short-to-medium term."

Revolution also flagged that while it had "confidence" in its medium-term prospects, "cash management has been tight, and it is clear that the delivery of the strategy will benefit from a more robust capital structure, with additional capital to invest into the company.

"As such, the board has been actively reviewing the company's funding structure."

It noted that its banking partners remained supportive, and that talks to amend and extend its £32m revolving credit facility - which runs until October - were "active and constructive".

But that did not stop the shares tumbling and by 1000 BST they had lost 38% at 4.61p. The stock has now shed 97% since the 2021 initial public offering.

Revolution's management has spent the last year attempting to turn the troubled business around, including cutting costs and discounting thousands of products - around 75% of the original portfolio.

It said the year to 28 February had been "transformational".

Revenues fell 26% year-on-year to £141.6m, hit by the portfolio overhaul as well as softness in the US market and digital channels. Revolution sells online and through in-store concessions.

Underlying adjusted earnings before interest, tax, depreciation and amortisation are expected to come in between £6m and £6.5m. Adjusted EBITDA was £12.6m in 2024.

Russ Mould, investment director at AJ Bell, said: "The lipstick effect that thrived during the pandemic has gone out of fashion.

"Faced with a different kind of uncertain backdrop, one might have thought we'd see a repeat of this sales bonanza, yet Revolution's trading update suggests otherwise.

"US sales have been miserable, and it is in the firing line for tariffs, as 60% of products sold Stateside are made in China."

Revolution's full-year results are due later in the summer.

Email this article to a friend

or share it with one of these popular networks:

• DIGG
• FACEBOOK
• STUMBLEUPON
• MIXX
• YAHOO BUZZ
• DELICIOUS
• REDDIT
• NEWSVINE