Boohoo mounts boardroom purge at Revolution Beauty

Manchester online retail giant, boohoo, is staging a boardroom purge of Revolution Beauty Group, in which it holds a 26.6% stake.

It took a 7.1% stake in the London-based beauty products retailer in August last year, and by last November it held 26.47% of the business’s stock.

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

The group formed an investigation committee of Derek Zissman (non-executive director) and Elizabeth Lake (CFO since June 2022) to liaise with independent advisers looking into the company’s affairs. Last November it appointed Bob Holt as chief executive, who had been providing leadership as interim chief operating officer since October 14, 2022.

Earlier this month Revolution published long-delayed interim results that revealed a £13.3m pre-tax loss in the six months to the end of August 2022, and a 4.2% drop in revenues to £75.3m.

Today (June 19), boohoo announced moves to install its own team to Revolution’s boardroom.

In a stock exchange announcement it said it has notified the board of Revolution Beauty of its intention to vote against the reappointment of Bob Holt, Derek Zissman, and Elizabeth Lake at the company’s upcoming June 27 AGM.

Boohoo has also requisitioned a general meeting where it proposes to remove Bob Holt, Elizabeth Lake and Derek Zissman as directors, and to appoint boohoo non-executive directors Alistair McGeorge and Neil Catto as directors.

If appointed, it is expected that McGeorge will serve as interim executive chairman and Catto as CFO of Revolution Beauty and that the reconstituted board will then undertake a rigorous process to appoint additional independent directors.

In light of this, boohoo said it has also requested that the existing board of Revolution Beauty does not proceed to appoint Rachel Maguire and Matthew Eatough as directors.

The statement added: “As Revolution Beauty’s biggest shareholder, boohoo is grateful to Bob, Derek and Elizabeth for stabilising the business.

“However, as Revolution Beauty transitions to its next phase, where the focus must switch to growth, boohoo believes a senior leadership team with the right retail, e-commerce and consumer brands experience is required to deliver shareholder value.”

Alistair McGeorge has worked in the retail industry over the past 30 years and has been CEO and/or chairman of multiple retail brands in the UK and internationally, including Liverpool-based retailers Littlewoods and Matalan.

Neil Catto qualified as a chartered accountant with EY and spent nine years working in their Manchester, Palo Alto and Reading offices. He was previously finance director of dabs.com plc and has held senior financial positions in BT and The Carphone Warehouse Group.

This morning (June 20), in a separate announcement, Revolution revealed potential legal action against its founder and former CEO, Adam Minto.

It said it wrote to him on May 19, 2023, regarding claims that Mr Minto breached his fiduciary, statutory, contractual and/or tortious duties to the company. The statement said: “Certain of the matters alleged contributed to the delay in the audit of the group’s FY22 results, and to the suspension of the company’s shares from trading on AIM. The company is looking to recover material sums relating to the exceptional costs the company incurred as a result of the matters alleged.”

So far, no substantive response had been received from Mr Minto or his representatives, so the company has set him a deadline of July 7, 2023 to respond to the letter of claim.

The statement adds: “The company also expects to publish a further announcement in the coming days in light of the announcement made by boohoo group plc on 19 June 2023, including regarding the company’s upcoming AGM (which is currently scheduled for 27 June 2023) and the requisition of a general meeting of the company under section 303 of the Companies Act 2006.”