Revolution Beauty results: H2 profit marks progress, but risks remain

A tale of two halves for Revolution Beauty

Revolution Beauty's full-year numbers are bruising, but they do not tell the whole story.

Revenue for the year ended 28 February 2026 fell 28% to £102.1 million, while the company swung from an adjusted EBITDA profit of £4.7 million to an £8.2 million loss. Adjusted EBITDA measures earnings before interest, tax, depreciation and amortisation, with further adjustments intended to show underlying trading.

The statutory picture was weaker still. Revolution Beauty reported a £30.6 million loss before tax, compared with a £16.8 million loss in FY25.

However, performance improved sharply after founders Tom Allsworth and Adam Minto returned to the business in August 2025, alongside an equity fundraising and refinancing. The group moved from a £12.5 million adjusted EBITDA loss in the first half to a £4.3 million profit in the second half, beating previous management guidance.

That second-half reversal is the central investment point in these results.

Revolution Beauty's key FY26 figures

Metric	FY26	FY25	Change
Revenue	£102.1 million	£142.6 million	-28%
Gross profit	£37.7 million	£54.4 million	-31%
Gross margin	36.9%	38.2%	-1.3 percentage points
Adjusted EBITDA	£8.2 million loss	£4.7 million profit	£12.9 million decline
Loss before tax	£30.6 million	£16.8 million	Loss increased
Cash	£5.9 million	£5.7 million	4% higher
Inventory	£19.0 million	£21.4 million	-11%
Net debt	£24.7 million	£26.2 million	6% lower
Loss per share	5.6p	5.4p	Loss increased

The annual comparison therefore remains poor. Revenue, profit and gross margin all deteriorated, while the statutory loss widened substantially.

Why the second-half improvement matters

The H2 numbers suggest the turnaround measures are beginning to affect the underlying operation rather than simply appearing in management's plans.

Second-half revenue increased to £52.7 million from £49.4 million in H1. More importantly, gross margin rose from 32.2% to 41.4%. Management attributes the improvement to more realistic forecasting and tighter stock management after significant clearance activity damaged the first-half margin.

Revolution Beauty also achieved more than £9 million of annualised cost reductions across operating expenses, marketing and administrative overheads. Annualised means the expected saving over a full year, rather than necessarily the amount captured in FY26.

Inventory fell by 11% to £19.0 million, while net debt reduced from £30.2 million at the half-year stage to £24.7 million at year-end. Cash increased from £1.8 million at 31 August 2025 to £5.9 million at the end of February 2026.

These movements suggest better cost control and working-capital discipline. The question is whether Revolution Beauty can now grow sales without rebuilding the inefficiencies it has spent the past year removing.

Sales remain the weak point

Revenue contraction was widespread.

UK sales declined 24% to £33.6 million, while US sales fell 41% to £22.2 million. Rest of World revenue dropped 24% to £46.3 million.

By channel, global store group revenue declined 27% to £83.7 million, while digital revenue fell 36% to £18.5 million.

Management says the reduction partly reflects deliberate SKU rationalisation. An SKU, or stock keeping unit, is an individual product line or variation. Cutting weaker SKUs can improve inventory efficiency and product focus, but it also reduces the number of items available to generate sales.

The US was particularly challenging. Revolution Beauty cited underperforming licensed ranges and collections, retail space reductions, markdown costs and the transition from the Relove value brand to Makeup Revolution.

The group also faced new US tariffs during FY26. Management has since negotiated price adjustments with US retailers to mitigate those costs, with the benefit expected to emerge in FY27.

Early FY27 trading offers encouragement

The current trading update is more positive than the historic full-year figures.

Sales in the first quarter of FY27 were broadly flat year on year and ahead of management expectations, with that trend continuing into Q2. Flat sales are hardly spectacular, but they represent a material improvement from the significant double-digit declines experienced during FY26.

The group also generated positive EBITDA during the seasonally quieter first quarter, against a £4.2 million loss in the same period last year.

Direct-to-consumer sales grew 26%, helped by the company's focus on TikTok Shop. Management views DTC growth as an indicator of improving brand health because it gives the business a more direct relationship with customers.

Revolution Beauty continues to target growth, profitability and cash generation across FY27. However, it has not disclosed numerical revenue, EBITDA or cash flow guidance.

Debt and going concern uncertainty cannot be ignored

The turnaround is not yet occurring from a comfortable financial position.

Revolution Beauty ended FY26 with net debt of £24.7 million and net liabilities of £31.1 million. It used £2.8 million of cash in operating activities and spent £6.2 million on capital expenditure and intangible assets.

Liquidity was supported by £15.5 million of net proceeds from the equity fundraising, of which £4.0 million was used to repay bank debt. The fundraising strengthened the company's finances, although issuing new shares also diluted existing shareholders. The impact on individual holdings is not disclosed.

The directors concluded that preparing the accounts on a going concern basis remains appropriate. They said the group has sufficient cash resources and covenant headroom for its current organic growth plans.

However, the announcement also identifies a material uncertainty that may cast significant doubt on the group's ability to continue as a going concern. Its liquidity and covenant compliance depend on delivering planned cost savings, working-capital improvements and other mitigating actions, alongside the outcome of ongoing commercial matters and claims.

In a severe but plausible downside scenario, weaker cost savings or working-capital improvements could lead to covenant breaches without further mitigating action. That warning deserves as much attention as the return to second-half profitability.

Positives and risks for investors

What looks better

• Adjusted EBITDA moved from a £12.5 million H1 loss to a £4.3 million H2 profit.
• Gross margin recovered to 41.4% in the second half.
• More than £9 million of annualised cost reductions have been achieved.
• Inventory and net debt both declined.
• Q1 FY27 produced positive EBITDA against a £4.2 million loss last year.
• DTC sales grew 26%, supported by TikTok Shop.

What still needs work

• FY26 revenue fell 28%, including a 41% decline in the US.
• The full-year adjusted EBITDA loss was £8.2 million.
• Loss before tax widened to £30.6 million.
• The group remains dependent on successful cost, cash and working-capital execution.
• Net debt remains material relative to the current earnings base.
• The accounts contain a material going concern uncertainty.
• FY27 financial guidance has not been quantified.

The next test is profitable growth

Revolution Beauty has provided credible evidence that its operating performance improved during the second half of FY26. Better margins, lower costs and positive early FY27 EBITDA suggest the turnaround has moved beyond the planning stage.

But this is still an early recovery. Cost cutting and tighter inventory management can stabilise the business, yet management acknowledges that shareholder value will ultimately require consistent, profitable growth.

Investors should now watch whether broadly flat sales turn into sustainable growth, whether the improved gross margin holds, and whether positive EBITDA begins translating into cash generation and lower debt. Progress on those measures would make the turnaround more durable and reduce the significance of the current going concern warning.