Full Year Results For the 52 weeks to 27 June 2020 - Brand Architekts
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Full Year Results For the 52 weeks to 27 June 2020
Brand Architekts Group plc | Full Year Results 2
Presenting today
Quentin Higham Tom Carter Roger McDowell
Chief Executive Officer Chief Financial Officer Non-Executive Chairman
Quentin joined as CEO on 4 May 2020. He was Tom joined as CFO on 22 June 2020. Tom was Roger was reappointed to the Board in March 2012
previously Managing Director of Yardley of London previously Group Finance and Operations Director having previously served as a Non-Executive
Ltd/Wipro Consumer Care between 2010-2020. at Technetix Group Limited, a market leading Director from July 2011 to January 2012. Roger is
Prior to that, he was Marketing Director at Coty, technology company. Prior to that, he was Regional an experienced director of over 30 years' standing:
with responsibility for the Rimmel cosmetics brand; Business Controller at Alliance Boots, Financial he led the Oliver Ashworth Group through dramatic
UK Brand Director at Swatch between 1999-2001 Controller at Sky Media and Finance Manager growth, main market listing and sale to St. Gobain,
and Head of UK Marketing at global cosmetics at Procter and Gamble. Tom trained as a Chartered following which he was appointed to a number of
company, Revlon between 1992-1999. In addition, Accountant with PwC. non-executive roles, including chairmanships in
he has first-hand knowledge of our brands having both public and private equity backed businesses.
been Commercial Director between 2002 and 2006 Roger currently serves as Chairman of Avingtrans
at KMI brands with responsibility for the Fish brand plc and Chairman of Flowtech Fluidpower plc. He is
and King of Shaves. also a Non-Executive Director of Tribal Group plc,
Proteome Sciences plc, ThinkSmart plc, Augean
plc, British Smaller Companies VCT2 plc.
Brand Architekts Group plc | Full Year Results 3
Brand Architekts is a British
beauty challenger brand business
that is focused on:
- Insight led brand development
- Ethical and efficient sourcing
and manufacturing
- Omni-channel routes to market
- Creating noise and buzz
- Brand invigoration
Overview
Brand Architekts Group plc | Full Year Results 5
Overview
of the year
Sale of manufacturing business in August 2019 for £35m
Created Brand Architekts, focused solely on owned brands
with key attributes including:
Higher margin
Control of own destiny
Good portfolio of existing brands
Focused on NPD
Strong retailer relationships
Strong balance sheet
Brand Architekts Group plc | Full Year Results 6 Transitional year Transition from fully leveraged model Creation of stand alone business with need for appropriate operations and finance functions Executive management team transition out of Company Former CEO Chris How appointed interim CEO October 2019 Outbreak of COVID-19 Appointment of new executive team
Brand Architekts Group plc | Full Year Results 7
Operational headlines
UK sales declined by 16% International sales declined by 24%
Despite encouraging volume growth across our three ‘drive’ Following the heavy impact of currency devaluation in Turkey
brands, two of which were re-launched within the period
Also impacted by increased tariffs on cosmetic goods
Overall low consumer confidence and pressure within the shipped from China to USA
retail environment has resulted in a reduction of both
category space and the effectiveness of promotional activity
Brand Architekts Group plc | Full Year Results 8
COVID-19
Impact Response
Overall sales performance was stronger than anticipated A number of short-term reductions on our discretionary
expenditure
Fluctuating demands of customers and end-consumers
in Q4 impacted the sales mix A short-term suspension of rent payments for our offices in
Teddington
Brands' performance within UK grocers showed single
digit growth Took steps to manage staff costs, including a hiring freeze
across a number of vacant positions
Online sales channels, through large e-tailers such as
Amazon or own branded websites, delivered high All Board directors agreeing to a 20% reduction in their
double digit growth respective salaries or fees (April-June).
Sales of handcare products increased significantly. Took the decision not to participate in the furlough scheme,
Whereas sales of male haircare and shaving products so that the team could focus on its response to consumer
saw a major decline behaviour post COVID-19, and to plan for FY21.
Brand Architekts Group plc | Full Year Results 9
Income statement
£'000 FY20 Full Year FY19 Full Year
Brands Central Costs TOTAL Brands Central Costs TOTAL
Revenue 16,250 - 16,250 19,676 - 19,676
Cost of sales (10,533) - (10,533) (12,679) - (12,679)
Underlying Gross Profit 5,717 - 5,717 6,996 - 6,996
35% 35% 36% 36%
Commercial & administrative costs (4,513) (1,082) (5,595) (3,377) (1,264) (4,641)
Underlying Operating Profit 1,204 (1,082) 121 3,619 (1,264) 2,355
Exceptional items in Cost of Sales (2,535) (2,535)
Amortisation - (260) (260) - (260) (260)
LTIP - (4) (4) - (115) (115)
Exceptional income/(costs) (176) (1,268) (1,444) - (48) (48)
OPERATING PROFIT (1,507) (2,614) (4,122) 3,619 (1,687) 1,932
Finance Income - 77 77 - - -
Finance Costs (46) (256) (301) (18) (126) (144)
PROFIT BEFORE TAXATION (1,553) (2,792) (4,346) 3,601 (1,813) 1,788
Reported Gross Profit:
Underlying Gross Profit 5,717 5,717
Exceptional items in Cost of Sales (2,535) (2,535)
Reported Gross Profit 3,182 - 3,182
20% 20%
Brand Architekts Group plc | Full Year Results 10
Balance sheet
£'000 FY20 FY19
Year End Year End
Tangible fixed assets 142 21
Intangible fixed assets 11,714 12,817
Deferred tax assets 2,515 1,714
Investments - -
Total non-current assets 14,371 14,552
Inventories 3,724 5,211
Trade & other receivables 3,969 3,475
Cash and cash equivalents 21,240 381
Current tax receivable 836 285
Assets held for sale - 22,700
Total current assets 29,769 32,052
Trade & other payables 4,503 6,628
Loans & borrowings 1,029 1,139
Current tax payable - 527
Total current liabilities 5,532 8,294
Loans & borrowings 1,066 2,091
Other payables 81
Pension obligations 13,237 9,417
Deferred tax liabilities 1,154 1,061
Total non-current liabilities 15,538 12,569
NET ASSETS 23,070 25,741
Share capital 862 857
Share premium 11,987 11,987
Other reserves - 1,094
Re-measurement of pension liability (10,588) (6,502)
Retained earnings 20,711 18,160
Subtotal equity 22,972 25,596
Non-controlling interest 98 145
TOTAL EQUITY 23,070 25,741Brand Architekts Group plc | Full Year Results 11
Cashflow £'000 FY20
Full Year
FY19
Full Year
Cash and cash equivalents at beginning of period 381 934
Profit excluding depreciation, amortisation and net finance cost 3,727 5,542
Decrease / (Increase) in inventories 1,487 (2,129)
Net increase / (decrease) in trade & other payables (2,440) (1,189)
Net (increase) / decrease in trade & other receivables (494) 1,252
Purchase of fixed assets (129) (1,787)
Loans repayments (1,135) (1,127)
Net finance expenses paid (128) (263)
Tax paid (773) (593)
Dividends paid (813) (1,123)
Interest income received 77 -
Dividend income received - 1,146
Issue of new share capital 5 -
Contributions to defined benefit pension plan (318) (282)
Impact of disposal of manufacturing business 21,793 -
Increase / (decrease) in cash and cash equivalents 20,859 (553)
Cash and cash equivalents at end of period 21,240 381
Net cash / (debt) at start of period (7,168) (11,769)
Increase / (decrease) in cash and cash equivalents 20,859 (553)
Net cash outflow/(inflow) from decrease/(increase) in borrowings 4,322 5,154
Net cash / (debt) at end of period 18,013 (7,168)CEO Initial Observations
Brand Architekts Group plc | Full Year Results 13 Since joining undertaken detailed review of 01 Organisational structure 02 Operational efficiency and culture 03 Portfolio of brands 04 HR policies 05 Sustainability and inclusivity
14
Strategic priorities and growth plan
Operational efficiency Optimising our portfolio Channel development Environmental & social
responsibility
Further investment in new financial “Fewer, Bigger, Better” Rationalise Omni-channel and UK retailer-exclusive Acting responsibly is not only the
control systems for the transition to a brand & product line up. Relaunch all brands. Available on the high street in right thing to do; it makes our
fully functional consumer centric non performing brands within 2021. leading pharmacy and drugstore chains; business a better partner for our
brands-only business Support all omnichannel brands with national grocery stores; e-tailers; and retail customers, and a choice that
relevant marketing programs our end-consumers feel good to
through our own e-commerce websites
make.
– Invest in business intelligence Immediate priorities – Invest in, and ramp up, direct-to- - To embed our Sustainability
software that will help us consumer (DTC) activity across all Blueprint, launched in September
anticipate future requirements, our main brands. 2020, across the business and our
trends and opportunities (Sage BI) – SKU reduction of approx. 25% in
supplier partners
the next 2 years.
– Purchase & analyse external – Target DTC share to approx. 20% - Draw the roadmap that will take
consumer data effectively (IRI; over the duration of Project 50 us to the destination of being
– Seek M&A deals that complement carbon-neutral
EPOS; Nectar dashboards) our existing brand strengths (exc. acquisition)
- Assess where we can make a
– Improve forecast accuracy and
meaningful difference by
mange inventory more efficiently
supporting community and
(Sage Planning)
charitable activitiesReview of Portfolio
Brand Architekts Group plc | Full Year Results 16
Portfolio strategy
01 02 03 04 05
Wide portfolio of challenger Each brand/product needs Although our broad Our range will remain Combination of both
brands. to answer the specific portfolio ranges from broad, which will enable omni-channel (invest)
needs of the consumer. skincare, haircare, bath us to flex with changing and UK retailer-exclusive
Clear price positioning & bodycare to gifting consumer behaviour and (harvest) brands.
based on good, better, best NPD focus will be on and accessories, our macro-economic factors
category principles. improving productivity strategic focus will be on
& relevance, rather than the higher margin
just new products. categories – skincare,
haircare, bath & body.Brand Architekts Group plc | Full Year Results 17
Product Portfolio
Brand Positioning Status Haircare Facial Skincare Bath & Body Men's Accessories & Gift Self Tan
Argan+ Best UK Exclusive
Beautopia Better UK Exclusive
Dirty Works Better UK Exclusive
Dr Salts Best
Fish Better
Happy Naturals Good Change
Kind Natured Better Change
Mr Haircare Best
Quick Fix Facials Good
Real Shave Co. Good
SenSpa Best UK Exclusive
Superfacialist Better
The Solution Best 6 month
ROOT PERFECT Good
Xmas Gifting Exclusives Good UK Exclusive
Acquisition Better or Best
Red – relaunch; Orange – redesign; Green - goBrand
Brand Architekts Group plc | Full Year Results 19
Brand Building
Rationalise number of brands from 20+ to 10
(excluding acquisitions) by 2025.
- Emphasis on productivity. Look to improve each sku’s
effectiveness and consumer appeal. Continual upgrade of existing,
rather than 100% focus on new.
- Reducing sku count and improving productivity will lead to better
inventory management; improved cash flow; higher MOQs and
lower COGs.
- Consumer centricity - continual use of consumer data (IRI;
Nectar; google analytics; DTC database) to understand needs and
aspirations of existing, lapsed and new consumers.
- Initiate & implement transformational ATL campaigns –
investment into brand building for all omnichannel brands.
- Social media engagement & investment (DTC strategy).
- Appoint a retained 360 Beauty comms agency to promote all BA
brands within the UK media.Brand Strategies
Super Facialist Brand Strategy 2020/21
Brand Architekts Group plc | Full Year Results 22
Brand Strategy
VISION
Drive growth on Super Facialist to become a £10m net sales brand in 5 years.
Be recognised as the brand that empowers consumers to become their own Super Facialist, boosting confidence to understand and listen to
their skin.
Development of proprietary technology across the brand to launch in year 3
MISSION
Offer consumers easy to understand, efficacious skincare at an affordable price point
BRAND PROMISE BRAND VALUES BRAND VOICE/PERSONALITY BRAND POSITIONING
“Feel like you’ve had an expert Effective: Blends the best Authentic, expert, innovative, ABC1 Women (aged 25-55),
facial everyday” ingredients from science & nature. clear and consistent, passionate looking for affordable skincare.
Accessible: Easy to understand
Easy to tailor skincare that works regimes, simple product messages,
all at an affordable price point.
with you as your skincare needs
Harmony: Mix & Match skincare
change.
have all been developed to work
effectively with each other and your
skin.
Innovation: Pioneering ingredients
that deliver on promises.
TAGLINE
Be Your Own Super FacialistBrand Architekts Group plc | Full Year Results 23
Portfolio Strategy – NPD 3 Year Plan
YEAR 1 YEAR 2 YEAR 3
Sleep Smart Complex – Night Cream Launch of Proprietary Technology
Advanced Anti-Ageing x3 SKUs Refresh (RIRO)
Premium Skincare CC Primer Serum Salicylic Acid – 2x NPD (Spot Gel & Vitamin C – New Story
Retinol+ Anti-Ageing Eye Cream Day Cream) Firming Regime – New Story
SF Targeted (FE Technology) SPF
Teen Skincare
New Categories Christmas Gifting Supplements
Skincare ToolsBrand Architekts Group plc | Full Year Results 24
Portfolio Strategy – Year 1
Discontinue 5x lines which are underperforming
Introduce 5x NPD lines
New New New New NewRoutes to Market
Brand Architekts Group plc | Full Year Results 26
Routes to market
01 UK Market – Drive Omni-channel distribution
- High Street
- Grocers
- e-tailers
02 International growth – focus on key markets
03 Direct To Consumer (DTC) – opportunity for significant growth27
DTC Strategy
New Structure E-com Audience Etail Pure Play
Create a total new Digital Launch new upgraded PPC & analytics Invest & secure listings
& e-Comm team websites for all brands, across all beauty pure
initially hosted in Brand Social Media remarketing plays – Amazon; Feel
Asset creation and Architekts.com, effectively Unique; Look Fantastic;
proactive 24/7 creating a market place for Weekly newsletters Ocado, Beauty Bay
management all current & potential new
Affiliate investment
bands
Onsite reviews
Head of
Digital
Digital Digital Sr eCommerce
Marketing Marketing Trading
Manager Manager Manager
Digital
eCommerce
Marketing
Assistant
AssistantM&A
Brand Architekts Group plc | Full Year Results 29 M&A 01 02 03 Any strategic acquisition will need to Any acquisition will need to take Any single brand acquisition further strengthen the Group’s areas into consideration current & would need to have scale of core competence – category future consumer behaviour; or be readily scalable. (Skincare; Haircare; Bath & Body); consumption and proprietary channel & consumer, or address technology and/or product POD. areas of weakness, such as any needs gaps i.e. DTC; product; customers; and International reach.
Outlook
Brand Architekts Group plc | Full Year Results 31
Short-term outlook & near-term drivers
01 Difficult H1 trading conditions – Covid & caution in Christmas ranges
Six brands being relaunched & three upgraded in time for H2 buying schedules/retailer range review
02
Focus on new distribution – UK grocery (new Super Facialist listings in Waitrose (August 20) &
03 Morrisons (October 20), Happy Naturals in Morrisons (October 20)), DTC (new strategy agreed) and
International (Kind Natured launched in Walmart Mexico July 20).
04
Create brands of real substance – The Solution launched into Superdrug in September 20.
05 Strong balance sheet
06 Potential M&A to accelerate scale and strategic visionBrand Architekts Group plc | Full Year Results 32
Conclusion
Sole focus New and Opportunities for Substantial net Distinctive and Established Potential
on profitable experienced further growth cash position appealing brand relationships for M&A
branded business leadership team online and portfolio with retailers both
in place internationally domestically and
internationallyAppendices Sustainability strategy Examples of Brand strategies
Blueprint Code Of Conducts Brand Architekts Group plc | Full Year Results 34
Our Code Of Conducts PACKAGING RAW MATERIALS
Reduce, Recycle, Remove, Replace, Respect Replace, Respect, Support
1. Reduce 1. Replace
▪ The content of virgin plastic in all our products ▪ Committed to use ingredients that do not
endanger our eco system in the way they are
▪ Our use of power, water and optimise shipping methods
produced or harvested
2. Recycle
▪ all products labelled appropriately to facilitate recycling at
home 2. Respect
▪ Packaging information broken down to better understand ▪ Working with manufacturers, raw material
whether they are recyclable suppliers that are members of recognized
organisations supporting ethical trading,
▪ For labelled products, label and primary material are the
sustainability and activism
same
▪ Working in partnership with our suppliers to recycle our
products/ wastage through their outlets/schemes
3. Support
3. Remove ▪ Working toward becoming a member of a
▪ Eliminate single use plastic – for example vac trays and recognized organisation
windows in giftsets
▪ Remove black plastic from existing products (find alternatives
i.e. black pigment) 4. Avoid
4. Replace ▪ Working towards a list of ingredients we do not
want to use
▪ Replace plastic where possible for other biodegradable
materials i.e. FSC sourced boards
▪ Move to friendlier inks and finishes
5. Respect
▪ Respect our natural resources by making sure our products
come from ethical suppliers
▪ People and Planet i.e. Citizen day, clean public areas, plant
trees initiatives by employeesRoot Perfect Brand Strategy 2020/21
Brand Architekts Group plc | Full Year Results 36
Brand Strategy
VISION
Drive growth on Root Perfect in the UK to become an £2.5m Net Sale brand by 5 years.
Increase distribution outside of the Discount Sector (bricks & mortar and online) to become the Market’s essential affordable Root Concealer brand.
Extend the Brand portfolio by launching targeted NPD to give the consumer ‘at home’ DIY products.
MISSION
Provide consumers with versatile, easy to use, essential products that do what they say, all at an affordable price.
BRAND PROMISE BRAND VALUES BRAND POSITIONING
Effective products that offer a quick Effective: Tried & tested formulations that use key ingredients All Women:
solution for all hair colours whether at to perform to high standards. – Entry into hair colouring
home or on the go. Accessible: Easy to understand products at an affordable price. – Interim salon users
Harmony: Blended pigments cover a wide spectrum of hair – Grey cover ups
colours offering a natural looking finish.
– Permanent alternativesBrand Architekts Group plc | Full Year Results 37 Root Perfect Current Line Up & Stockists
Brand Architekts Group plc | Full Year Results 38
Redesign 2021 **An improved more premium aesthetic, maintaining the easy identifiable
shades and ensuring strong shelf standout with colour blockingBrand Architekts Group plc | Full Year Results 39 Portfolio Strategy • Salon restrictions have increased the DIY mentality- this is set to continue • As we enter a recession, there will be less disposable income • BA can capitalise on the success of the entry priced Root Perfect brand during lockdown • Offer value solution products that allow a quick fix at home or on the go
Brand Architekts Group plc | Full Year Results 40
NPD- Instant Touch Up Concealer
Product: Precision application, instantly conceals grey
hair. Adds moisture & shine, with light enough to
spread easily no clumping. For all hair types.
RRP: EDLP £2.99 (versus market leader at £5.99)
Line Up: Medium Brown, Dark Brown & Black
Supplier: Lo Mei Cosmetics, Taiwan
BA Margin: (subject to shipping rates) @50%
Next Steps:
• Product testing, claims & safety assessments
• Confirm lead times & launch date
• Design in work
• Present nationwide
** design tbcBrand Architekts Group plc | Full Year Results 41
NPD- Root Colour
BRAND Unit Sales
CLAIROL
PERMANENT ROOT 2 174 744
TOUCH-UP
MAGIC RETOUCH
1 455 498
SPRAY
GARNIER EXPRESS
133 699
RETOUCH
REVOLUTION ROOT
113 420
COVER UP POWDER
ALL OTHER ROOTS 76 689
PRIVATE LABEL
76 269
ROOTS
BATISTE POWDER 28 610
MAGIC RETOUCH
28 181
PRECISION BRUSH
EVERPRO BEAUTY
ZERO GREY ROOT 25 521
CONCEALER
EVERPRO BEAUTY Product: At home hair colour, quick and effective.
BACK TO BLONDE 22 059
SPRAY Takes in just 10 minutes!
PHIL SMITH ROOT
21 254
TOUCH UP SPRAY
SYOSS ROOT
18 892
RRP: EDLP £2.99- £3.50
RETOUCHER SPRAY
RICHARD WARD
(Superdrug £3.69 or 2 for £7)
14 701
SPRAY
JOSH WOOD
COLOUR BLENDING 11 266 Line Up: 5 shades to complement the existing RP
line up to assist in link sales opportunities.
BRUSH
JOSH WOOD ROOT
10 080
SMUDGER
JOSH WOOD ROOT
MARKER
6 759 1. Blonde, 2. Light Brown, 3. Medium Brown,
IRENE GARI COVER
YOUR GRAY STICK
87 4. Dark Brown & 5. Black.
COLOUR WOW ROOT
9
COVER UP POWDERThe Solution Brand Strategy 2020/21
Brand Architekts Group plc | Full Year Results 43
Brand Strategy
VISION
To become a trusted performance led brand, offering products driven by on trend ingredients, accessible for all.
Leverage ‘skinification’ concept and brand name by year 2 & expand into other categories.
To become at £1.5m+ Net Sales brand in year 5
MISSION
First to market with advanced scientific led formulations heroing a key ingredient.
Drawing from tried and tested skincare trends for healthier skin across the whole body. All products promote being your best self not changing you!
BRAND PROMISE BRAND VALUES BRAND VOICE/PERSONALITY THE CONSUMER
– To use effective well-known Straight talking, claims-led body care that Straight talking, positive, confident, Women aged 25-35 years old
ingredients commonly associated with gets right to The Solution. knowledgeable, inclusive, empowering, She doesn’t believe in changing her
skincare. Effective: Uses key on trend ingredients on-trend. body to please the world but wants to
– Provide great formulations with great to deliver real benefits overcome some of her concerns and
results to target common skin Inclusive: We believe in embracing your insecurities.
concerns. body and being body confident. Driven heavily by social and trends –
– Educate on ingredients and their Accessible: Easy to understand, simple engaging and thriving on beauty hacks
benefits products that are available to buy across
– Always be 100% recyclable, use PCR online and in store.
material and be vegan friendly.
Products that get right to The SolutionBrand Architekts Group plc | Full Year Results 44
Portfolio Strategy – NPD 3 Year Plan
Year 1 Year 2 Year 3
Bodycare:
Bodycare
5 x sku launch Sept 20
Haircare exploration (2/3 skus) Skincare exploration (2/3 skus)
Range Stretch
Hand care exploration (2 skus) Lip care inclusionYou can also read
