22nd Aug 2025 09:16
(Alliance News) - Revolution Beauty Group PLC on Friday said it has terminated its formal sales process, having not received a proposal that would lead to an offer the board would recommend.
The news came as the firm pledged to slash costs amid declining sales and profitability, and raised GBP15 million via a placing and subscription at 3.00 pence per share. This includes cornerstone investment from the make-up brands co-founders, Tom Allsworth and Adam Minto, and from its largest shareholder, boohoo Group PLC, now trading as Debenhams.
Between them, the cornerstone investors hold just under 58% of Revolution Beauty stock, with boohoo having a 29% stake.
Allsworth will step in as chief executive over the "coming days", the firm said, with Colin Henry stepping down as interim CEO at that point, while Minto, will also return to the business in a consulting capacity.
In response, shares in Revolution Beauty rose 5.9% to 3.70p each in London on Friday morning.
Proceeds of the placing and subscription will be used to reduce debt, provide working capital, pay fees and provide a "basis for the business to return to growth."
In addition, the firm intends to raise GBP1.5 million by a retail offer at the same price.
Panmure Liberum Ltd is acting as nominated adviser, joint broker and joint bookrunner, alongside Zeus Capital Ltd, who is also acting as joint broker and joint bookrunner in connection with the placing and subscription.
Allsworth and Minto will lead a "strategic reset" at Revolution Beauty aimed at restoring growth and setting a "clear path to long-term value creation".
Chair Iain McDonald commented: "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."
Revolution Beauty intends to return to its "original formula for success - fast, trend-driven innovation combined with a product-led strategy", underpinned by a "leaner organisational structure, streamlined marketing spend and a strengthened balance sheet."
Sports Direct owner Frasers Group PLC was one possible bidder for the London-based cosmetics retailer, but it ruled out a move in June.
Frasers has also had a long-running spat with boohoo, which now trades as Debenhams.
In March, Frasers, which owns just over 29% of boohoo, helped block plans by the online retailer to rename itself as Debenhams.
Last December, Frasers failed in an attempt to secure two spots on the board of boohoo. It had wanted to install founder Mike Ashley, as boohoo chief executive.
The shake-up at Revolution Beauty came alongside results for the financial year to February.
The company reported a pretax loss of GBP16.8 million, swung from a GBP11.4 million profit the year before, as revenue dropped 25% to GBP142.6 million from GBP191.3 million.
Gross margin dipped to 38.2% from 46.2% reflecting the "significant" impact from the planned clearance of non-core inventory.
Gross inventory reduced by 41% to GBP33.1 million from GBP56.2 million.
Revolution Beauty said its clearance activity of stock on high levels of sales cover impacted gross margin in the first quarter of the current financial year and will continue to do so throughout the rest of the first half.
Gross margins in the first quarter of financial 2026 have also been negatively impacted by US tariff cost increases, it added.
Net sales in the first quarter of financial 2026 have declined 29% year-on-year, although the company has seen year-on-year decline rates improve in June and July. Nonetheless, it expects revenues for the second quarter of financial 2026 to be 25% lower from the year before.
Revolution Beauty said action has been taken to address the declines in revenue and it expects year-on-year revenue decline rates to reduce significantly in the second half of the year.
In addition to cost savings already realised, Revolution Beauty estimates that an additional GBP7.5 million of annual staff cost savings can be realised by financial 2027 as a result of a "material reduction" of headcount across geographies and business functions.
Based on the performance of the business in the first four months of financial 2026, the company now expects to achieve revenue of GBP110 million to GBP120 million.
It expects to be able to recoup earnings before interest, tax, depreciation and amortisation losses incurred in the first half of the year, so that adjusted Ebitda of low single digit millions will be achieved after the staff cost saving measures have been implemented.
The strategy will be implemented to establish an annual adjusted Ebitda run-rate of between GBP8 million to GBP10 million by the end of financial 2026, the firm said, based on "realistic assessments of expected demand and achievable gross profit margins."
By Jeremy Cutler, Alliance News reporter
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