Brand Architekts still loss-making but upbeat for future

Beauty specialist Brand Architekts Group has released its results for the six months to 31 December and said revenue fell from £10.6 million to £8.6 million with gross profit down to £3.4 million from £4.1 million. 

The underlying operating loss was narrower though at £244,000 after the company lost £877,000 on this basis in the previous year’s first half.

The overall operating loss was £813,000 after it had reached £1.75 million in the previous year. And the pre-tax loss was £759,000, down from £1.77 million a year earlier. The net loss for the company was £587,000 after a £1.06 million loss 12 months earlier.

CEO Quentin Higham said the “well documented cost-of-living crisis has resulted in an ongoing challenging trading environment, with consumers’ confidence adversely affected. This has resulted in a greater focus on price, with consumers either trading down to less expensive products or buying more on promotion. We have reviewed our product portfolio, notably by relaunching our Skinny Tan Gradual Tanner, as well as our promotional strategy and have put in place a strengthened offline offering for H2”.

He added that the ongoing strong performance of the UK Beauty High Street and the general softening of the direct-to-consumer market “reinforces the need for a strong omnichannel approach. We continue to work closely with our offline partners and I am pleased to see some notable distribution gains on our key Invest and Nurture brands. The focus for our DTC channels (primarily Skinny Tan) has been on improving profitability and ROAS (return on advertising spend). We have significantly reduced the running costs of the site, by bringing external agency costs (such as performance management) in-house and renegotiated all agreements and continue to monitor Advertising & promotional investment”.

Over the next 12 months it has a strong brand development programme in place, with a number of product launches (Super Facialist and Skinny Tan); brand redesigns (Super Facialist, Dirty Works, Fish, MR Expert solutions); brand extensions (The Solution Menopause); and relaunching Skinny Tan as Skin & Tan in 2025 “in response to consumer and customer feedback”.

As for the future, Higham added that while Super Facialist H1 net sales were up 42%, driven by the launch of 14 SKUs into all 580 Holland & Barrett stores, its H2 also “looks positive” with the launch of new products and campaigns.

And in “response to market trends and consumers’ switch to more affordable gradual tanners, the new Skinny Tan Body Glow will launch in Boots, Superdrug, Asda and Tesco in Q3. Boots International has also confirmed launch of Skinny Tan as a Boots exclusive in all 144 stores across six Gulf countries in Q3”. 

Meanwhile, Dirty Works’ contribution increased by 33%, driven by the Q2 rollout to over 500 Watsons stores in nine countries, with “very encouraging sell out results” in Thailand, Turkey, Malaysia, the Gulf, Singapore and Hong Kong. And “encouraging discussions” are happening with Watsons to launch into Taiwan and Indonesia in Q3.

Higham concluded: “During this period, we have completed the simplification of the UK organisation and have made progress in minimising our losses, in particular reducing H1’s underlying operating loss from £0.8 million to £0.2 million.

“Trading conditions remain challenging… the reduction in revenue also reflects the business’s planned strategy to exit underperforming and less profitable brands and focus on fewer, bigger, solution-led margin-accretive brands. This is demonstrated by the improvement in gross profit percentage and brand contribution.

“In H2 we will be supporting Skinny Tan and Super Facialist with planned targeted digital awareness and acquisition campaigns, with an increased focus on Tik Tok. We remain confident that the foundations we are building will enable us to return to profitability and achieve our medium and long-term goals.”