Revolution Race reports rock solid results with profitable growth
The Swedish outdoor clothing company Revolution Race shows clearly that the direct-to-consumer (D2C) strategy can work beautifully. The company has grown rapidly but, compared to its D2C peers, with healthy margins. More info about the quarter can be found on the company website (report & slides).
The sales jumped for the last quarter of the year by 20%. The revenues for the Last Twelve Months (LTM) have risen by 17,7% since Q4/2022.
This strong growth is achieved with a healthy Operating margin of 23%. The strong profitability is the big differentiator of Revolution Race to many of the other D2C companies. With Gross margins hovering above 70% and cost kept at 44% of revenue, the company has been able to generate healthy profits. Notable is the efficiency in personnel expenses, which are only 5-7% of revenue.
“It is also worth noting the negative impact from net other operating expenses of SEK 2 million in this quarter. The underlying EBIT is actually a bit higher.”
With regards to growth, the company has been able to grow on all fronts. The Nordic market was, for some time, a more difficult environment for Revolution Race, with several quarters of declining growth. The company has also been able to bounce back to growth in the Nordics with two consecutive double-digit growth quarters.
However, the most impressive growth has been in the DACH region, where it keeps on growing with 20+% growth rates quarter after quarter. The DACH region is already 56% of all revenue for the company. The Rest of the World is quickly catching up with the Nordics as the second-biggest sales region.
“I think looking at the performance, I think the main explanation behind our strong performance is actually sort of our general core offering. I think we are very well positioned in the market now, where we see that the consumer sentiment is a bit weak. We sell products with many functions at high quality, but at the same time, also at competitive prices.
But on top of that, within that core offering, we’ve been successful in launching also new categories and that we can highlight the alpine collection, which was a very successful launch. ”
Revolution Race is still a small company compared to many of the big outdoors, let alone sports or fashion brands. However, with this kind of growth compounded in some years, things might look very different, especially considering how the international Revolution Race has been from the start.
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