A co-founder who reached a settlement to pay £2.9m back to Revolution Beauty is set to return to the struggling business as it plans a wave of redundancies.
Revolution reached a settlement with former CEO and co-founder Adam Minto (pictured) last year, who agreed to pay the sum of £2.9m to the cosmetics brand after it accused him of breaching his fiduciary duties to the company.
Minto is now set to return alongside fellow co-founder Tom Allsworth, the latter of whom is expected to be named CEO in the coming days – subject to shareholder approval at a general meeting – with Colin Henry stepping down as interim CEO and leaving the business.
The moves are in connection with a proposed equity fundraise to raise around £15m. Revolution has also ended its formal sale process as it “has not received a proposal that would lead to an offer for the company which would be recommendable by the board”.
It has now extended its banking facilities conditionally to 31st July 2028, with the revolving credit facility reduced to £28m.
Sales at the firm are down 25.5% year-on-year to £142.6m, following a ‘rationalisation’ of its product and brand portfolio. Its operating costs decreased to £58.1m from £75.8m, with adjusted loss before tax of £5.5m – compared to profit of £4.3m in FY24.
Revolution said the co-founders believe an additional £7.5m can be saved annually by FY27 as a result of a material reduction of headcount across the group’s geographies and business functions.
It said this week that it would report weaker than expected profits after discussions with its auditor, leading to a drop in its share price.
Henry was parachuted into the interim CEO role after Lauren Brindley departed for the role of chief merchandising and digital officer at Ulta Beauty, Inc., the largest beauty retailer in the US.
Brindley had taken the reins in September 2023 after Bob Holt OBE was effectively forced out of the role by shareholder Boohoo Group plc following months of boardroom battles.
The listed retail brand floated in July 2021 with a valuation of almost £500m but is worth just £12.4m today, with its share price having fallen 82% in the last 12 months alone.
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Following this morning’s multiple announcements to the London Stock Exchange, chairman Iain McDonald said: “Revolution Beauty is a great brand, but the business has lost its way. We are confident that with a return to the founder-led management team who originally scaled the brand, there is a clear path back to growth and long-term value creation.
“This will be underpinned by a leaner organisational structure, streamlined marketing spend and a strengthened balance sheet. The funding from the equity raised will be used to reduce debt, provide working capital and ensure a stable base for the business to return to growth.
“This plan significantly reduces financial risk and improves the business’ capital structure, restoring confidence in both near-term stability and long-term growth potential.”
In June Mike Ashley’s listed retail group Frasers – which owns brands including House of Fraser, Sports Direct and Evans Cycles, as well as holding stakes in THG, ASOS, Hugo Boss and Currys – withdrew its intention to acquire Revolution in a cut-price deal.
It also has stakes in boohoo, despite Ashley having been involved in a well-publicised feud with its chairman, Mahmud Kamani, culminating last week in a demand for his suspension and an independent investigation.
Yesterday Boohoo Group Plc announced a £175m refinancing deal, leading to a 15% rise in its share price in the day’s trading. However the terms of the fast fashion retailer’s deal have raised a few eyebrows – especially as it is a household name – with one figure describing them as “eye-wateringly expensive”.
Gareth Smythe, CEO at M&A specialist Hilton Smythe, pulled no punches in his analysis of the deal – and said that it makes the group a sitting target for a takeover.
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