Revolution Beauty Group PLC (AIM:REVB) shares plunged 27% in early trading on Thursday, their lowest since late 2022, after a profit warning.
A trading update revealing a soft fourth quarter and delays to some bulky new contracts which will mean they will not be included in the financial year ending 28 February.
The company said it "continues to make encouraging progress expanding its relationships with existing and new retailers" and "the scale of these opportunities remains the same, and the launches into Walmart in the US and DM in Germany remain on track for February 2025".
Analysts at house broker Panmure Liberum cut their revenue and EBITDA forecasts but said while disappointing "it does not change the overall strategic direction as it "was always a transitionary year".
Investment director Russ Mould at AJ Bell said the trading update is "more beast than beauty" as the delays soured the turnaround story and also has a knock-on for Boohoo Group PLC (AIM:BOO), with the fall in value meaning the online fashion retailer's 27.09% stake in the business is now worth £1.9 million less.
"For a business that was worth nearly £500 million when it joined the stock market four years ago, Revolution Beauty’s life as a listed company has been nothing short of ugly," says Mould.
"While Boohoo has been building a stake, so too has activist investor Pentwater Capital Management which owns 8.91%. Quite what it intends to do remains to be seen, particularly as Revolution Beauty seems like small fry compared to its other positions including stakes in Boeing, Ansys and Kellanova."
He said the turnaround "seems to be one step forward, two steps back" and it was "getting to the point where Revolution Beauty’s management might need to accept the company is better off as part of a larger entity rather than trying to sweat it out alone".