Brand Architekts losses widen in 'turbulent' year

Beauty and personal care group Brand Architekts reported a “turbulent and testing” year on Tuesday, with full-year statutory revenue falling 10% to £14.3m.

The AIM-traded firm put the fall for the 12 months ended 30 June down to a “challenging” external environment, and the impact of reduced consumer confidence on demand.

It said that excluding the contribution from Innovaderma, which was acquired on 31 May and which delivered £0.8m of sales in June, organic sales were down 15% on year-on-year.

The company’s underlying gross profit margin was “significantly impacted”, declining to 33.5% from 36.9% in the 2021 financial year.

It said that reflected a wide range of cost pressures throughout the supply chain that it could not pass onto retailers due to previously-agreed pricing commitments.

Given the “challenging” trading environment, Brand Architekts generated an underlying operating loss of £1.8m, widening from £0.3m a year earlier.

The group said it retained a net cash position of £11.3m at year-end, after the payment of the £2m cash consideration to acquire Innovaderma, and the majority of the associated transaction costs of £0.8m.

“The past year has been set against a backdrop of exceptional macroeconomic headwinds,” said chief executive officer Quentin Higham.

“The group has faced unprecedented challenges as a result and we have had to show agility in order to continue to deliver for our customers.

“The acquisition of Innovaderma was a significant milestone for the group.”

Higham said the firm now had an “improved portfolio” of core brands that it could scale, as well as realising the benefits of a number of cost synergies.

“We are focused on successfully delivering our integration plan, growing our international presence and implementing strategies that focus on profitability, whilst capitalising on the group's new online presence, as well as its retailer customer base.

“Whilst we recognise that the future is difficult to predict with any certainty as the true impact of the inflationary environment remains unknown, we remain confident in our long-term strategy.

“The past few years have not been easy, but NPD continues at pace, and we have diversified products, channels and markets which stand us in good stead.”

At 1208 GMT, shares in Brand Architekts Group were down 14.29% at 27p.

Reporting by Josh White for Sharecast.com.