Revolution Beauty co-founder steps down as it slumps to a loss
Co-founder of Revolution Beauty leaves because online retailer suffers loss after audit scandal
- Tom Allsworth has stepped down from his position as non-executive chairman
- A control investigation had found him and former CEO Minto provided secret loans
- Revolution Beauty overstated profits by around £23 million and revenues by £9.6 million
The Revolution Beauty co-founder resigned when the troubled online retailer revealed results that were “significantly below” forecasts after an audit found it had boiled the books.
Tom Allsworth, who was found to have made secret loans, has stepped down from his position as non-executive chairman effective immediately and has been replaced by the company’s senior non-executive director, Derek Zissman.
The board change was announced along with the company’s results for the year to the end of February 2022, which were severely delayed after accountant BDO signaled “serious concerns” with its accounts.
Revolution Beauty overestimated profits by around £23m and revenues by £9.6m, results show
The results show that Revolution Beauty overstated profits by around £23 million and revenues by £9.6 million.
The group, whose shares remain suspended, posted an adjusted loss before nasties (Ebitda) of around £800,000, rather than the £22 million profit it predicted before the account irregularities were revealed.
Revenues were up 17 per cent to £184.6m, although they are lower than the £194m previously reported by the group.
Zissman told shareholders, “While these results are significantly below the previous management team’s expectations to the market, they nonetheless reflect a robust company with a strong brand, loyal following and significant potential in terms of both sales and profitability.”
He now expects the company to return to “normalized trading” and make “significant” progress in resolving the issues identified in the investigation.
“We continue to take action to ensure we have the right processes and governance in place across our business,” he added.
The investigation, launched in September and now closed, had revealed “a number of serious problems” with running the company under its previous management.
These include loans from former CEO Adam Minto and Tom Allsworth, founder of Medichem – which was acquired by Revolution Beauty in 2021 – to an employee and some distributors.
None of these loans, totaling approximately £1 million, had been disclosed to the board.
Chief executive, Bob Holt, said, “Integrity and honesty in every aspect of our business is paramount.
“This has been the focus of the new leadership team as they reset internal controls and processes to ensure we are able to achieve consistent operational excellence on a global scale and in line with the standards of a UK plc.”
Revolution Beauty said it would release a current trade update in the coming weeks alongside its interim results and 2023 results at the end of August.
It will also inform investors about its shares, which have been suspended since September last year.