Revolution Beauty’s co-founders to step back until auditing probe is finished

The co-founders of Revolution Beauty have agreed to “step away” from their roles temporarily while an investigation into the group’s accounts is conducted.

Executive chairman Tim Allsworth and chief executive Adam Minto will remain directors of the beauty products retailer but will not be involved in its day-to-day management until the investigation is complete.

The e-commerce company insisted the decision “was not the result of a case” arising from the investigation, which is being conducted by Forensic Risk Alliance and law firm Macfarlanes.

It also announced that industry heavyweight Bob Holt OBE had been named Revolution’s Chief Operating Officer on an interim basis.

Holt is currently chairman of the healthcare sector Totally and Bristol-based engineering firm Cosgrove & Drew, having previously held the same position at social housing company Mears for 23 years.

During his tenure at Mears, Holt grew the company from a little-known contractor with 83 employees to one with a turnover of more than £900 million and more than 12,000 employees on the books.

Revolution told investors on Friday it needed “an operations leader who can devote their full time and attention to managing the group’s operations and lead ongoing discussions with the group’s stakeholders.”

Three weeks ago, an investigation was launched into the company’s accountancy practices in response to a number of ‘serious concerns’ from accountancy firm BDO.

These include issues related to the retailer’s ability to provide “sufficient and accurate audit evidence” in some areas and the validity of certain commercial arrangements.

BDO recommended appointing outside parties for a review, while Revolution also set up a “committee of inquiry” headed by executive director Derek Zissman and finance chief Elizabeth Lake to assist the independent advisers.

No definitive timeline has been given for the probe, but Revolution stated in September that it could take several months to complete.

While that is underway, shares of the London Stock Exchange remain suspended, having already fallen in value since listing in the summer of last year.

Founded in 2014, the Kent-based retailer sells hair, skincare and makeup products in over 100 countries, including Superdrug, ASOS and Boots stores in the UK.

The group prides itself on offering ‘cruelty-free’ products, meaning that they are not tested on animals during the development phase, and using upcycled ingredients.

In a full-year trading update published in May, Revolution said revenue had risen 42 percent to around £194 million for the 12 months to February, while adjusted underlying profit had grown to £22 million.

But since then, the company has reported that trade is struggling amid a deteriorating economic backdrop and challenges stemming from the easing of lockdown restrictions.