Revolution Beauty Group PLC (AIM:REVB) shares jumped almost 6% to 23.75p after it swung back to annual profits and said that, while its strategy shift means lower sales in the first half of this year, growth should return in the second.
For the past year to end-February, revenue grew 2% to £191.3 million, including the impact of significant product clearance activity in the first half, as revealed in an update earlier this year.
But the cosmetics business underlying profit (EBITDA) swung to £12.6 million from a £7.5 million loss last time, with a bigger swing on a statutory level to a profit before tax of £11.4 million from a £34 million loss in the 2023 financial year.
Net debt increased £2.4 million to £23.1 million.
The performance was based on a strategy focussing on the 'Revolution masterbrand' with the aim of become a "global top five player in the mass beauty market", with the expansion of retail distribution across key geographies and the launch of a new product development (NPD) strategy launched with a greater focus on efficiency.
Post year-end, trading was reported to have continued in line with internal expectations, with the masterbrand strategy requiring a reduction in the number of brands and stock-keeping units, which Revolution said means first-half sales will be lower than last year.
CEO Lauren Brindley, who joined from Walgreen Boots last summer as part of a settlement with top shareholder Boohoo Group PLC (AIM:BOO), said the past year was one of "great strategic and financial progress following two challenging years".
She added: "As we progress through the new financial year, I am excited about the potential of our reinvigorated pipeline of innovation and the number of opportunities to expand our retail distribution globally.
"As the strategy continues to take effect, we expect to see a return to growth in the second half of the year. That will put us firmly on the right trajectory to achieving our ambition of being a top-five player in the mass beauty market."
Broker Liberum said results were as expected, representing the first of a two-year turnaround strategy, with profit margins recovering to support what is a self-funding strategy.
"The reset of the business is taking hold and will allow for more focussed NPD, improved sell-through, greater stock turn and freeing up of cash to invest in the core masterbrand. It will take time to rebuild credibility with investors, but we are hopeful the signs of recovery become more evident in the second half of this year."