MAV Beauty lowers 2019 outlook, acquires The Mane Choice
today Nov 14, 2019
Canadian beauty group MAV Beauty Brands Inc. said on Wednesday that it does not expect to meet its full-year 2019 guidance, despite an 8 percent increase in its third-quarter revenue and a new acquisition.
The Ontario-based company reported revenue of $28.4 million for the quarter ended September 30, 2019, compared with $24.2 million in the prior-year period.
Net income for the third quarter increased to $2.9 million, compared with a net loss of $6.7 million in the equivalent period in the previous year.
Still, the company is predicting lower-than-expected growth in international revenue in the fourth quarter.
MAV Beauty Brands will equally be cutting certain promotional programs with a retail partner and expects decreased distribution for certain new, more premium-priced products in the mass channel, which will all impact full-year revenue.
"Our third-quarter financial results showed good progress across key financial metrics, highlighted by improved gross margins, adjusted EBITDA, and most notably free cash flow. In a category growing at less than 1%, our portfolio has double-digit point of sale growth," said Marc Anthony Venere, founder and chief executive officer.
The company added that it does not expect its full-year 2019 revenue and adjusted EBITDA results to be within its previously stated guidance range.
"While there are high points across the business that show our strategy and platform are working, we are facing some challenges that will impact near-term results and moderate our growth rate, causing us to fall short of our previous forecasts.”
The company also announced the acquisition of The Mane Choice, a fast-growing brand serving the natural, textured hair care market.
Founded in 2013 by Courtney Adeleye, The Mane Choice's broad portfolio includes more than 100 SKUs consisting of shampoos, conditioners, hair growth vitamins, and other innovative treatments. For the 12-month period ended September 30, 2019, The Mane Choice had net sales of approximately $24.4 million and adjusted EBITDA of $6.4 million.
Most recently, the company acquired cruelty-free self-care brand Cake Beauty in January 2018 and plant-based beauty label Renpure in March of the same year.
The acquisition agreement included upfront cash consideration of $29 million.
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