What's Happening?
Revolution Beauty is undergoing significant changes as founders Tom Allsworth and Adam Minto return to the company. Allsworth is set to assume the role of CEO, replacing interim CEO Colin Henry, while Minto will serve in a consultancy capacity. The leadership change is part of a broader strategy to restore growth through a 'rebalanced' plan that emphasizes fast, trend-driven innovation and a product-led approach. However, the company is also implementing cost-cutting measures, including job cuts across various geographies and business functions, aiming to save £7.5 million annually by FY27. The financial year 2025 saw a 25.5% drop in sales to £142.6 million, with gross margins falling by 8 percentage points to 38.2%. Despite these challenges, the company has relaunched its Relove value brand and established a profitable discount outlet channel.
Why It's Important?
The return of Revolution Beauty's founders marks a critical juncture for the company as it seeks to navigate financial instability and declining sales. The strategic shift towards its original formula of innovation and product focus is intended to rejuvenate the brand and drive long-term growth. The job cuts, while necessary for financial stability, highlight the challenges faced by the company in maintaining profitability. The success of this turnaround strategy could have broader implications for the beauty industry, particularly in how companies balance innovation with cost management. Stakeholders, including employees and investors, stand to be significantly impacted by these changes, with potential gains in market share and financial performance if the strategy succeeds.
What's Next?
Revolution Beauty plans to raise approximately £15 million through an equity fundraise to reduce debt and provide working capital. The company expects to achieve revenues between £110 million and £120 million in FY26, with adjusted EBITDA reaching low single-digit millions after implementing cost-saving measures. The focus will be on stabilizing the business and returning to growth, with significant US retail customers already showing year-on-year growth. The company's performance in international markets, such as Turkey, has exceeded expectations, indicating potential areas for expansion.
Beyond the Headlines
The return to founder-led management could signal a cultural shift within Revolution Beauty, emphasizing agility and innovation. The company's ability to adapt to changing market conditions and consumer preferences will be crucial in regaining its competitive edge. Additionally, the focus on a leaner organizational structure and streamlined marketing spend may set a precedent for other companies in the industry facing similar challenges.
