Revolution Beauty hopes for recovery from tariff relief after 26% sales plunge

Revolution Beauty has revealed a 26% drop in annual revenue for the year ending February 28, 2025. The company brought in £141.6 million (US$189 million) in sales, down from £191.3 million (US$255.4 million) the previous year. However, it is hopeful that newly reduced US tariffs on Chinese imports will ease pressure on its margins.

Following the financial announcement, the UK-based beauty brand’s share price fell approximately 40%, hitting a record low. The company is now reviewing its funding options as it looks to strengthen its financial position ahead of a key loan set to expire in October.

The company ended the year with £26.3 million (US$35.3 million) in net debt.

“FY25 was a transformational year for Revolution Beauty, during which it discontinued over 6,000 stock-keeping units to create a scalable and profitable foundation for future growth,” the brand says.

However, the strategy had an immediate cost, and the sales decline reflects “the rationalization of the product and brand portfolio.” Revolution Beauty has not yet publicly disclosed a list of the products it discontinued during this portfolio restructuring.

The brand also cites continued struggles in the US and online: “Softness in the US market and on digital channels, as previously reported, continued into January and February 2025.”

“March and April have been softer than planned due primarily to performance weakness in pure-play digital retailers and weakened consumer confidence impacting US performance.”

The brand exempts Amazon, saying sales continue to grow at the online retailer.

Profit drops, inventory improves

Despite the revenue slump, Revolution Beauty expects to report an underlying adjusted EBITDA of between £6.0 million and £6.5 million (US$8 million–US$8.7 million). It also recorded a stock provision charge of £9.2 million (US$12.3 million) related to unsellable items. The company also reported £5.7 million (US$7.6 million) in cash. 

The brand is reducing inventory and focusing on core lines.The cosmetics company made progress in managing stock levels: “Gross inventories reduced from £60m (US$80.4 million) to £33m (US$44.2 million) on 28 February 2025.”

Revolution Beauty reassured its investors that its cost-cutting is ongoing. “Management continues to reduce costs in line with performance and to capture the benefits of having a simplified product and brand portfolio.”

Tariff easing offers hope

In FY25, 23% of Revolution Beauty’s revenue came from the US, with around 60% of those products manufactured in China. This activity makes the company especially vulnerable to trade tensions. Earlier this year, it paused US shipments to avoid high duties amid tariff uncertainty.

However, a recent US–China trade agreement is expected to ease pressure. On May 11, the US government confirmed it would significantly lower tariffs on Chinese imports for 90 days.

This move follows talks between Beijing and Washington to de-escalate the trade conflict. Under the agreement, tariffs on Chinese goods were cut from 145% to 30%, while China reduced its tariffs on US imports from 125% to 10%.

Revolution Beauty enthusiastically embraced the news: “The company welcomes the announcement… regarding imports to the US from China, which will be subject to much lower tariffs than previously proposed.”

This change means the expected financial hit from rising duties will be less severe than previously feared.

“The increase in tariffs... will have a consequently lower impact on the company’s cost of goods sold than previously modelled,” says the company.

As a result, Revolution Beauty has resumed shipments into the US, especially for new product launches. The brand is also talking to retail partners about any potential price changes, depending on how the tariff policy evolves.Revolution Beauty is navigating a challenging retail climate.

Tight finances prompt review

Revolution Beauty has flagged concerns about its financial flexibility, stating that while it remains confident in its strategy, the company will need more capital to fully execute its plans.

“While the Board has confidence in the future medium-term prospects for the company, cash management has been tight, and it is clear that the delivery of the strategy will benefit from a more robust capital structure with additional capital to invest in the company,” the brand states.

Revolution Beauty currently has a £32 million (US$42.9 million) revolving credit facility (loan), which will expire in October 2025.

The company confirmed it has entered “active and constructive dialogue” with its lenders to amend and extend this loan to ensure the company can meet its near-term obligations and future growth plans.

Management added that its banking partners “remain supportive,” indicating that negotiations are ongoing but not yet finalized.

The company has previously linked its losses to a deliberate plan to simplify its product range and clear old stock, describing the moves as part of a broader strategy to achieve “long-term, profitable growth.”

Revolution Beauty’s financial recovery efforts follow a turbulent period, including a £2.9 million (US$3.6 million) settlement with co-founder and former CEO Adam Minto after an accounting oversight led to suspended trading and boardroom changes.