Research: Consumer
Revolution Beauty Group’s (REVB’s) capital markets day (CMD) provided an opportunity for the new management team to present its refocused strategy: to become a top five global beauty brand by 2030. Management aims to drive product innovation at affordable prices, tailored to the demands of its target Generation Z consumer. REVB will continue to develop its online and offline routes to market with new and existing direct-to-consumer (D2C) and business-to-business (B2B) partners, using data to grow its online presence and improve marketing campaigns. Efficiency initiatives in inventory, supply chain and operations, as well as strategic choices with distributors and vendors, should provide cost savings and subsequent reinvestment in marketing spend to drive growth.
Written by
Revolution Beauty Group |
Looking good
|
Personal care products |
QuickView
14 February 2024 |
Share price graph
Share details
Business description
Bull
Bear
Analysts
|
Revolution Beauty Group’s (REVB’s) capital markets day (CMD) provided an opportunity for the new management team to present its refocused strategy: to become a top five global beauty brand by 2030. Management aims to drive product innovation at affordable prices, tailored to the demands of its target Generation Z consumer. REVB will continue to develop its online and offline routes to market with new and existing direct-to-consumer (D2C) and business-to-business (B2B) partners, using data to grow its online presence and improve marketing campaigns. Efficiency initiatives in inventory, supply chain and operations, as well as strategic choices with distributors and vendors, should provide cost savings and subsequent reinvestment in marketing spend to drive growth.
Refocused strategy
REVB has faced several well-publicised financial and commercial issues over the past two years since listing in mid-2021. The new management team is focused on improving the group’s financial performance and growth prospects. The new strategy concentrates on three brands (REVOLUTION, Relove and I Heart) with fewer stock keeping units in seven categories, down from seven brands across 11 categories. This should enable greater profitability and free cash flow generation. REVB’s internal team can identify product areas trending on social media, which can then be brought to market in 16 weeks. This is significantly more agile than many of its peers, which typically take 18 months.
Growing market opportunity
REVB has a resilient and diversified revenue mix, operating in five of the eight largest markets. The global beauty and personal care market is expected to grow to $737bn by 2028, from $626bn in 2023 (source: Statista). This represents a clear opportunity for REVB to take share, with management targeting c £1bn of retail sales by 2030, from c £370m at present, to become a top five mass beauty brand from the current position of 13. By market, the US is the priority, while growth should be driven by investment in the master REVOLUTION brand, innovation, the development of D2C and B2B channels and the opportunity in skincare.
Improving financial profile
The refocused strategy is already bearing fruit, with the interim results highlighting revenue growth of 20%, an 8pp improvement in gross margin and the return to positive EBITDA. Management updated its FY24 guidance at the CMD, anticipating single-digit revenue growth with an improved adjusted EBITDA range of £11–12m. Alongside the revenue targets, REVB is aiming for £10m of cost savings over the next three years, indicating robust margin expansion.
|
Historical financials
Source: Refinitiv. Note: Consensus is not available. |
EDISON QUICKVIEWS ARE NORMALLY ONE-OFF PUBLICATIONS WITH NO COMMITMENT TO WRITING ANY FOLLOW UP. QUICKVIEW NOTES USE CONSENSUS EARNINGS ESTIMATES.
|
|
Research: Investment Companies
The Diverse Income Trust’s (DIVI’s) managers Gervais Williams and Martin Turner focus on generating a dividend income stream that is more resilient and has the potential to grow faster than those of the trust’s peers. They believe that over time this strategy should lead to superior capital appreciation as well as income growth. Since launch in 2011, DIVI’s dividend has compounded at an average annual rate of around 6%. UK stocks have been out of favour with global investors, who now make up around two-thirds of the UK shareholder base compared with 17% in 1994. As a result, the UK market looks very attractively valued in both absolute and relative terms, so there may be considerable upside potential from an improvement in sentiment towards UK stocks.