Online fashion retailer Boohoo has revealed plans for a boardroom coup to take control of troubled Revolution Beauty. The Manchester-based group became troubled Revolution Beauty's largest shareholder when it doubled its investment in November 2022, representing a 26.6% stake.
Founded in 2014 by Adam Minto and Tom Allsworth, the beauty company floated on London's junior AIM market in August of 2021, valuing the business at £495 million ($632,560,500). However, shares have been suspended since last September after auditors flagged certain accounting issues sparking an investigation into its finances.
An independent investigation, commissioned by the company’s directors following the auditors' refusal to sign off on the account surfaced issues around acquisition, sales, and personal loans. Chief Executive Adam Minto resigned last November when the probe was launched, and Tom Allsworth stepped back from day-to-day involvement, resigning as Chairman before the group published 2022 results.
In January, Macfarlanes and Forensic Risk Alliance found Revolution Beauty had inflated sales by £9 million ($11.5 million) to meet annual targets and uncovered investments and loans made by Minto and Allsworth to an employee and distributors. The probe also claims that insufficient diligence was done on acquisitions.
In results released on June 2, significantly delayed by auditing problems, the business reported losses narrowed to £13.3 million ($17,024,266) in the six months to the end of August 2022 from £28.8 million ($36,808,272) a year earlier. Revenue fell 4.2% to £75.3 million ($96,233,023), with digital wholesale revenue falling 22%, while its own web sales dropped 8%.
Boohoo outlined its plans to the London Stock Exchange, revealing that it notified the Revolution Beauty board of its intention to vote against Bob Holt, Derek Zissman, and Elizabeth Lake's reappointment and appoint Alistair McGeorge and Neil Catto as directors.
If appointed, it is expected that McGeorge will serve as Interim Executive Chairman and Catto as Chief Financial Officer of Revolution Beauty and that the reconstituted board will then undertake a rigorous process to appoint additional independent directors.
In response, Revolution Beauty said,"The board is in the process of reviewing the content and validity of the requisition with its advisers. A further announcement will be made in due course, including with respect to any impact that the requisition may have on the company's upcoming annual general meeting. In the meantime, shareholders are urged to take no action."
Additionally, Revolution Beauty revealed possible legal action against its founder and former chief executive, Adam Minto alleging he breached his duties to the firm which contributed to the delay in the group’s 2021-22 results and led to the suspension of shares since last September.
