Revolution Beauty’s FY25: deep reset, founders return, and a £15m lifeline
Revolution Beauty’s unaudited FY25 numbers are out alongside three big headlines: a founder-led comeback, a proposed equity raise of approximately £15 million via an accelerated bookbuild, and a conditional extension of its banking facilities to July 2028. This is a reset year built around clearing stock, narrowing the product range, and cutting costs hard.
All figures are for the year ended 28 February 2025 and are unaudited, with an audit ongoing.
Headline numbers you need to know
| Metric | FY25 | FY24 | Change |
|---|---|---|---|
| Revenue | £142.6m | £191.3m | -25.5% |
| Gross margin | 38.2% | 46.2% | -8.0ppts |
| Gross margin (ex non-core stock charges) | 44.0% | n/a | n/a |
| Adjusted EBITDA | £4.7m (3.3% margin) | £12.6m (6.6%) | -£7.9m |
| Loss before tax (statutory) | £(16.8)m | £11.4m | down £28.2m |
| Cash | £5.7m | £8.6m | -£2.9m |
| Net debt (ex leases) | £26.2m | £23.1m | +£3.1m |
| Inventory (gross) | £33.1m | £56.2m | -41.1% |
| Inventory (net of provisions) | £21.4m | £40.8m | -53% |
Jargon watch: Adjusted EBITDA is a company-defined measure that strips out non-recurring items, non-cash charges and certain one-offs. Gross margin is profit after product costs but before overheads. An accelerated bookbuild is a rapid placing of shares, usually with institutions.
What drove the results: SKU cull and clearance drag
Revenue fell 25.5% to £142.6 million as the business deliberately rationalised its product and brand portfolio. The SKU clean-up triggered heavy clearance activity and extra provisions on non-core lines, which knocked gross margin down to 38.2%. Management says losses and provision charges on non-core inventory were £8.4 million; excluding these, gross margin would have been 44.0%.
Operating costs fell from £75.8 million to £58.1 million, a solid saving that cushioned the hit from lower sales. Digital revenue dropped to £28.7 million (20% of sales) and stores to £113.9 million (80%). By region, the UK delivered £44.5 million, the USA £34.3 million and Rest of World £63.8 million.
Cash generation from operations improved to £8.2 million, helped by the sharp inventory reduction. But liquidity stayed tight: cash was £5.7 million and the £32 million revolving credit facility (RCF) was fully drawn at year end, with net debt at £26.2 million. The balance sheet shows net liabilities of £17.1 million.
Founders are back with a product-led plan
Co-founder Tom Allsworth is set to return as CEO once the shareholder circular for the fundraise is published, with co-founder Adam Minto joining as a consultant. The strategy doubles down on the business’s original playbook: fast, trend-driven innovation and a product-led model. A leaner organisation is central to the plan.
- Estimated additional annual staff cost savings of £7.5 million by FY27 via headcount reductions across geographies and functions (costs to achieve not disclosed).
- Resurrect some profitable SKUs that were discontinued, re-launch the Relove value brand with new retail partners, and open a profitable discount outlet channel.
- More “digital first” launches and tighter commercial discipline – focus on more profitable products, customers and channels.
Banking facilities extended to 2028 – if the raise lands
The lenders have agreed to extend the RCF to July 2028, reduce it to £28 million, and amend covenants in line with the new plan – but this is conditional on a successful equity raise, which itself needs shareholder approval. The raise of approximately £15 million is intended to reduce net debt and fund working capital. Until the raise completes, there is a material uncertainty around going concern noted by the Directors.
Why it matters: the combination of fresh equity and an extended, right-sized RCF lowers financial risk and should give management the breathing room to execute the turnaround. Failure to complete would leave the Group constrained.
Current trading and FY26 outlook: H1 tough, H2 should ease
Q1 FY26 net sales declined 29% year-on-year, with margins under pressure from clearance and US tariff increases ahead of retailer price changes. The company expects Q2 FY26 revenue to be down by roughly 25% year-on-year, but says monthly declines improved in June and July 2025.
Guidance for FY26:
- Revenue expected in the £110 million to £120 million range.
- Adjusted EBITDA: “low single digit millions” for the full year after staff cost measures are implemented.
- Targeting an annual adjusted EBITDA run-rate of £8 million to £10 million by the end of FY26, based on realistic demand and achievable gross margins.
Pockets of strength: Amazon in Europe and the US continues to grow strongly; some large US retail customers are back to year-on-year growth; Turkey is outperforming. Social followers rose from 6.4 million to over 7.0 million.
Adjusting items: what changed under the bonnet
- Non-core inventory clearance and related provisions: £8.4 million charge (treated as adjusting).
- Restructuring costs: £0.364 million.
- Costs linked to settlement of a claim from Chrysalis Investments Limited: £0.6 million; non-recurring legal fees £1.242 million (including FCA-related advice).
- Finance income in FY24 benefited from a one-off £10.2 million gain on deferred consideration changes – not repeated in FY25, which exaggerates the year-on-year swing in statutory profit before tax.
Note: an FCA investigation into potential Market Abuse Regulation breaches (covering July 2021 to September 2022) remains open. The company can’t assess potential liabilities at this stage.
My take: the good, the bad, and what to watch
Positives
- Inventory has been reset decisively – gross down 41.1% to £33.1 million; net down 53% to £21.4 million. That supports cash and should stabilise margins after H1.
- Operating costs cut by £17.7 million, with more to come from the £7.5 million staff cost plan.
- Conditional RCF extension to July 2028 plus the proposed £15 million raise would materially reduce short-term financial risk.
- Pockets of growth in Amazon and selected US and international accounts show the brand still resonates.
Negatives
- Sales fell 25.5% and Q1 FY26 was down 29% – revenue momentum is still negative.
- Statutory loss before tax of £16.8 million; net liabilities of £17.1 million underline the need for the raise.
- Gross margin pressure persists in H1 FY26 due to clearance and tariffs; recovery relies on execution and retailer price resets.
- The RCF extension depends on the fundraise; going concern carries a material uncertainty until money is in.
- FCA investigation remains an open risk; outcome not disclosed.
Why this RNS matters for shareholders
This announcement blends a tough set of numbers with a credible, if demanding, turnaround blueprint. The equity raise will be dilutive, but it is paired with a long-dated facility and a sharper, founder-led strategy: fewer SKUs, faster innovation, and a lean cost base. If execution matches the plan, margin and cash should improve as clearance rolls off and the new launches scale.
Key things to track next:
- Completion terms of the c.£15 million fundraise and any pricing discount.
- Final documentation of the RCF extension to £28 million and revised covenants.
- Q2 FY26 revenue decline (guided ~25%) and evidence that H2 decline rates “reduce significantly”.
- Gross margin trajectory post-clearance and post-tariff pass-through to retail prices.
- Delivery of the £7.5 million staff cost savings and the year-end EBITDA run-rate of £8 million to £10 million.
Bottom line: Revolution Beauty has taken its medicine. The founders’ return, a refocused product engine, and a repaired balance sheet could put the brand back on the front foot – but the raise and H2 trading need to land cleanly. I’ll be watching liquidity, margins and Amazon/US momentum as the leading indicators from here.
