Revolution Beauty Posts Steep H1 Losses as Founders Return to Lead Turnaround

Trading update and outlook: profitability returning, guidance reset

Management reports a return to retail sales growth in H2 across key US and UK retailers and says the business has already returned to EBITDA profitability from H2 FY26.

• H2 FY26 Adjusted EBITDA expected around £4 million.
• By the end of FY26, the company aims to be on an Adjusted EBITDA run-rate of £8-10 million.
• Full-year sales and Adjusted EBITDA will not match guidance given on 22 August due to the weak H1 under prior management.
• NPD back on the agenda: a number of new product launches are slated for Spring 2026.

This is a classic reset: lower near-term expectations, tighter cost control, and a path to renewed growth via range rebuilding, sharper pricing and faster speed to market.

Balance sheet and liquidity: improved but not out of the woods

The refinancing has eased immediate pressure, but the RNS is candid about risk. The going concern section notes a material uncertainty remains around potential covenant non-compliance in a severe downturn or the need for alternative funding. Base-case and downside scenarios suggest compliance is achievable with further cost measures if needed.

Inventory is notably lower – gross inventory at £34.1 million versus £61.9 million last year – which should support cash conversion and reduce clearance drag if maintained.

Key risks to monitor

• Execution risk on the Walmart transition: the move from Relove to Makeup Revolution needs to translate into higher sell-through in the US.
• Innovation cadence: digital revenue fell 44.9%; getting back to fast, trend-led NPD is essential to reignite DTC and support retailer space.
• Tariffs and US pricing: negotiated price adjustments help, but elasticity will be tested.
• Covenant headroom: despite the extended RCF, delivery against the H2 profitability plan is important to keep the lenders comfortable.
• FCA investigation: the FCA probe into matters from July 2021 to September 2022 remains ongoing. The company has denied any breach, but potential liabilities are not quantifiable at this stage.

My take: a messy first half, but the reset looks credible

On the numbers alone, H1 was grim: revenue down a third, Adjusted EBITDA loss of £12.5 million and net debt creeping up. However, those results reflect the tail end of a strategy that clearly was not working. The story now is about the founder-led reset and the balance sheet repair post period end.

There are early green shoots: positive EBITDA in September and October, retail sales growth returning in H2 across key markets, inventory reduced, and pricing moves to offset US tariffs. The cost base is materially smaller, which should make incremental sales drop through to profit faster.

The caveats are real – execution risk on the range rebuild and US transition, ongoing FCA uncertainty, and that going concern flag – but the plan is straightforward: focus on what made Revolution tick in the first place and stop the cash bleed. If management delivers the H2 EBITDA of about £4 million and exits FY26 at an £8-10 million run-rate, sentiment and retailer confidence should follow.

In short: an ugly clean-up, a stronger base, and a path back to profitability that now needs to be proved quarter by quarter.