Revolution Beauty’s new CEO and annual results

Revolution Beauty had big news on Thursday with a new CEO and other directors, plus its full-year results. But what does it all mean for the company that has gone through a bruising period since last year? Let’s look at the headline news first.

 
The company has named Lauren Brindley as Group CEO, starting 18 September, with Colin Henry and Chris Fry named as Independent Non-Executive Directors. Bob Holt has — as previously flagged — stood down as CEO and left the business immediately. Alistair McGeorge moves to the role of Non-Executive Chairman on Brindley’s appointment.
 
She “brings a wealth of experience in senior management roles in mass consumer businesses specialising in the Beauty & Personal Care categories” and was most recently the Group VP for Beauty & Personal Care at Walgreens.

Brindley also “built a multi-year, multi-stage strategy to elevate and differentiate the business’s approach to omnichannel beauty retailing, leading to a positive upswing in its performance in the segment”.
 
Before that she was at Boots UK and Boots Retail International, where she served in various roles including Head of Prestige Beauty & Fragrance and Head of the No.7 Beauty Brand & Mass Beauty categories, where she led the brand’s repositioning strategy. She began her career at Tesco UK, serving in multiple roles within Marketing and Merchandising.
 
As for those non-exec appointments, Henry and Fry are replacing Jeremy Schwartz, Rachel Maguire and Matthew Eatough, who are resigning their positions. Henry previously held senior roles at M&S, Polo Ralph Lauren, Nike/Umbro, Jaeger, and New Look. And Fry has more than 30 years of finance and commercial experience at various non-beauty/fashion companies.
 
WHAT THIS MEANS
 
The story of who’s on Revolution’s board and who will lead it has played out over a period of months. But essentially it now looks even more like major shareholder Boohoo Group has achieved its aims than it did when a settlement to the Revolution-Boohoo spat was announced in July. That came after Boohoo had first urged boardroom changes back in June.

 
The fashion company has seen its nominees — such as McGeorge — taking key roles/joining the board and have largely ousted the previous leadership team. A remaining non-exec (Schwartz) and two new non-execs whose appointment Boohoo had opposed (Maguire and Eatough) have now gone.
 
Former New Look chief McGeorge has close links to Boohoo (he’s a non-exec at the group), as does another director Neil Catto (he’s on the Boohoo board and was once its CFO). And, as mentioned above, new non-exec Henry was also previously at New Look.
 
With Brindley, the company is also making a new start with a seasoned exec who has an impressive track record and who clearly comes with the approval of the Boohoo board appointees. 
 
On Thursday, Boohoo said it was grateful to the previous team “for stabilising the business. However, as Revolution Beauty transitions to its next phase, where the focus must switch to growth, Boohoo believes a senior leadership team with the right retail, e-commerce and consumer brands experience is required to deliver shareholder value”.
 
ANNUAL RESULTS
 
Revolution also released its full-year results on Thursday. 
 
It said it delivered “a resilient performance” in the year to February, “despite continuing to be impacted by previously flagged issues identified around stock, revenue and the carrying value of Revolution Labs”. 
 
And it saw the return of top-line revenue growth and positive EBITDA in H2, following “operational and commercial changes made by the new management team”.
 
Since the year end, “this trend has continued, and the group is pleased to be performing ahead of internal expectations”.
 
Group revenue increased by a fairly small 1.7% to £187.8 million, “primarily due to the reopening of physical stores”. Store revenue increased by 8.1% but online sales were lower by 12.1%.
 
The gross profit margin increased by 190bps to 40.4%, “primarily due to improved stock management and reduced freight costs”.
 
But the adjusted EBITDA loss widened sharply to £7.5 million from £0.8 million on the back of “increased marketing expenses and higher staffing costs due primarily to increased headcount, partly offset by improved margin”. However, the loss after tax narrowed to £33.6 million from £44.3 million.
 
It also saw a “significant improvement in year-on-year operating cash flow”.
 
It’s interesting too, given the previous jobs held by its incoming CEO at Walgreens and Boots, that it said its growth in store revenues was “driven by new distribution in Boots in [the] UK and Walgreen in [the] US”. 
 
WHAT DO WE MAKE OF THOSE RESULTS?
 
While still loss-making, it appears that the company is on the right trajectory and achieving distribution in beauty giants as important as Boots in the UK and Walgreen in America is a major step forward.

 
The company had changed its management in late 2022 as its previous CEO stepped down on an accounting probe and the new leadership clearly had a positive impact that continued after the year in question ended.
 
Of course, the progress wasn’t being made fast enough for major shareholder Boohoo and there’s now a completely new management team in charge.
 
Is this a risk? Change always is. But Brindley’s past experience in driving change and improved performance is significant. 
 
As for profitability, the board is now packed with finance specialists and even Chairman McGeorge’s experience at the helm of fashion retailers was preceded by him being a qualified chartered accountant. It will be interesting to see what the next set of results offers up.