Brand Architekts losses widen despite 40pc sales surge

Beauty and personal care group Brand Architekts reported full-year sales of £20.1m in its final results on Tuesday, marking an impressive 41% increase year-on-year.

The AIM-traded firm put the growth down to the full-year effect of the acquisition of InnovaDerma, which was completed in May 2022.

Even excluding InnovaDerma, revenue increased by 7% due to strong international sales, although the UK market presented challenging conditions.

The group said its underlying gross profit margins substantially increased to 39.7%, compared to 33.5% in 2022.

That boost was primarily fuelled by a full year of sales from the InnovaDerma portfolio, notably Skinny Tan.

Margins within the Brand Architekts business remained consistent year-on-year.

Despite navigating a demanding trading environment, the group reduced its underlying operating loss to £1.2m, an improvement of £0.6m compared to the prior year.

That improvement was attributed to more effective advertising and promotional efforts.

Furthermore, the group maintained a robust net cash position, reporting £8.2m at the end of the financial year, compared to £8.1m at the end of December.

However, the increase in the loss before tax to £6.8m, from £4.1m in 2022, was driven by a £3.5m impairment in the goodwill associated with the InnovaDerma business.

“Despite the challenging global and domestic macro-economic factors, we have made good progress, successfully integrating InnovaDerma and delivering £1.4m of ongoing opex savings,” said chief executive officer Quentin Higham.

“The immediate priorities remain driving brand awareness of key invest and nurture brands, delivering revenue synergies through international and domestic expansion, a laser focus on brand contribution and releasing working capital tied up in harvest brands.

“We remain confident that our brand development and brand reach strategic pillars will enable us to return to profitability and achieve our medium and long-term goals.”

At 1118 BST, shares in Brand Architekts Group were down 9.81% at 26.16p.

Reporting by Josh White for Sharecast.com.