Boohoo builds stake in beauty products firm, vowing to become ‘long term partner’
Manchester-based online retailer, boohoo, has taken a stake in beauty products business Revolution Beauty.
Boohoo announced to the London stock exchange this morning (August 17) that it has recently made a strategic investment into Revolution Beauty Group, amounting to a direct interest, as at the close of stock market trading on August 12, 2022, of 7.1% of Revolution Beauty’s issued share capital.
It said: “The investment builds upon the existing relationship between boohoo and Revolution Beauty, under which Revolution Beauty products are sold through several of the group’s direct to consumer brand websites and its online digital department store, Debenhams.
“The investment reflects boohoo’s belief in the growth potential of Revolution Beauty and it intends to be a supportive stakeholder and long term partner.”
In June 2020, Kent-based Revolution Beauty, signed a partnership agreement with another Manchester retailer, The Hut Group (THG).
The deal was aimed at initially delivering a direct to consumer online business for the US and Australia in 2020.
THG said the deal would complement the British beauty brand’s existing ecommerce offering and enable it to enter new markets, adding that the partnership reflects the growing number of established brands that are benefiting from THG’s international infrastructure and local knowledge of global territories to expand their presence.
The deal, worth an overall total of £100m, involved global beauty brands Elemis, PZ Cussons Beauty, Burt’s Bees, Nuxe, By Terry, along with Revolution Beauty.
Revolution Beauty’s range includes makeup, skincare and haircare – 100% cruelty-free with a vegan section.
Danni Hewson, financial analyst at Manchester investment platform, AJ Bell, said: “Everyone loves a bargain when they go shopping and retail companies are the same. Retailers don’t really want to cut their prices unless it means shifting large volumes, but what they do enjoy is buying rival businesses at a discount, either in part or full.
“For years, Frasers was the king of this strategy, waiting with its cheque book as soon as any retailer went into administration. But in recent years we’ve seen Next take strategic equity stakes, while boohoo and ASOS have been keen to buy companies or brands off the scrapheap.
“Boohoo might be facing slowing demand as its customers battle the cost-of-living crisis, yet that hasn’t stopped it taking a strategic stake in troubled make-up seller Revolution Beauty. The target recently ran into problems with its auditors over accounting issues, causing the share price to collapse.
“While we still don’t know the outcome of this probe, boohoo clearly didn’t want to put an opportunity to waste and has bought 7.1% of the business while the shares were going cheap.
“Boohoo bought assets from Debenhams last year as part of a plan to be a bigger player in the beauty products industry. Owning a slice of Revolution Beauty could speed up this strategy, particularly if it uses its status as a large shareholder to get good deals on product supply.”