Running a public company involves balancing short & long term priorities. Both hitting targets and equipping the business for multi-year profitable growth.
For me, affordable cosmetics and hair/skincare products firm Revolution Beauty (REVB ) ticks all the right boxes.
Saying today that it had purchased the challenger ‘Badass with Heart’ (ie BH Cosmetics) brand, 6.5m social media accounts & customer database out of bankruptcy for $3.9m (£2.9m) in cash.
Here BH sells affordable, vegan/cruelty-free cosmetics to loyal Gen Z consumers via its DTC channel, alongside several US & German retailers – delivering 2019 & 2020 revenues of $55.8m &
$33.7m respectively (re pandemic affected).
Sure this complementary acquisition won’t be immediately earnings accretive – as the operations are integrated, stock levels rebuilt and new suppliers onboarded.
Yet equally further out, the transaction offers significant strategic benefits including:
1) Synergies across the enlarged group’s product development, supply and distribution activities. In particular, accelerating REVB’s US growth, whilst re-energising BH’s brand & expanding it worldwide using the former’s global footprint.
2) Elsewhere BH is also loved for its colours & makeup brushes – thus strengthening REVB’s product line-up.
3) And assuming things go to plan, then BH’s pre-COVID turnover implies substantial upside for a negligible $3.9m initial investment.
CEO Adam Minto adding: "BH Cosmetics is an iconic US-born brand with a loyal fan base across digital & social platforms - loved by celebs and make-up artists everywhere. As a cruelty-free vegan brand, BH aligns with our ethos."
"Its strong offering in colour cosmetics & brushes, perfectly complements our business. We remain focused on building a British global beauty brand, capturing the vast market opportunity in mass beauty, and continuing to win customers around the world."