E-tailer boohoo doubles investment in troubled beauty group

Revolution Beauty Group

Manchester-based online retailer, boohoo, has more than doubled its stake in Revolution Beauty Group.

The businss made its first move on the London-based operator in August when it announced a strategic investment amounting to a direct interest of 7.1%.

Since then it has built up its stake to 12.8%, and today (November 28) the group made a stock exchange announcement that it had increased this to 26.47% in another strategic investment.

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.”

Revolution suspended trading in its shares on September 1, due to it being unable to complete its audit for the financial year ended 28 February 2022 and publish its annual report and accounts by 31 August 2022.

On September 23, the business said it had launched an investigation into its 2022 audit, and warned it could take several months for the probe to be completed.

It also warned that current market conditions, and the results of the investigation, could impact its 2023 figures.

Revolution’s auditor, BDO, had identified a number of serious concerns that had arisen during the course of its work on the 2022 audit regarding, amongst others, the group’s ability to provide sufficient and accurate audit evidence in respect of a number of key audit areas and the validity of certain commercial arrangements entered into by the company.

At the same time, the company appointed Macfarlanes and Forensic Risk Alliance to begin an independent investigation. The company also formed an investigation committee of Derek Zissman (non-executive director) and Elizabeth Lake (CFO since June 2022) to lead the process with the independent advisers.

Today Revolution appointed Bob Holt as chief executive. He had been providing leadership to the business as interim chief operating officer since October 14, 2022.

He boasts more than 30 years’ experience in senior positions and executive roles across a wide range of sectors.

He said: “Over the past six weeks I have seen first hand the quality of people working at Revolution Beauty, the overall popularity of the brand and innovation of products for customers around the world. I believe there is a huge opportunity for the business as it moves ahead and I am confident that, together with the team, we will drive the business forward.”

However, Sky News reports that lenders to Revolution have drafted in City advisers, claiming that HSBC and NatWest, Revolution’s main bank lenders, have asked Teneo Financial Advisory to monitor the situation amid the independent probe.

Russ Mould, investment director at Manchester investment platform, AJ Bell, said: “Boohoo revealing it had doubled its stake Revolution Beauty overnight represents an early vote of confidence in City veteran Bob Holt as he takes the helm at the troubled cosmetics outfit.

“Coincidentally, investment trust Chrysalis, which had written down the value of its holding in the firm to zero, announced a few days ago it had managed to sell this position for £5m in an off-market deal.

“Boohoo apparently still believes in the growth potential of Revolution Beauty and the brand despite the accounting problems and inconsistent trading which have dogged it since joining the market in July 2021.”

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