17th Aug 2022 09:29
(Alliance News) - boohoo Group PLC on Wednesday said it has made a "strategic investment" in beauty products seller Revolution Beauty Group PLC.
Revolution Beauty listed on London's junior AIM market in July last year at an IPO price of 160p. Shares were up 18% to 28.35 pence each in London on Wednesday morning, but remain 82% below its IPO price.
Meanwhile, boohoo shares were down 2.4% to 59.90p each.
Online-only retailer boohoo now has a 7.1% stake in Revolution Beauty.
boohoo explained: "The investment builds upon the existing relationship between boohoo and Revolution Beauty, under which Revolution Beauty products are sold through several of the group's direct to consumer brand websites and its online digital department store, Debenhams.
"The investment reflects boohoo's belief in the growth potential of Revolution Beauty and it intends to be a supportive stakeholder and long-term partner," the company added.
boohoo's vote of confidence comes after a difficult few weeks for Revolution Beauty. The stock has been hit by a warning on cost inflation and a statement that its auditors found "certain accounting issues" that could have a "material impact" on results for the year ended February 28, 2022.
Last week, Revolution Beauty said: "In the event that material adjustments are required, the group profitability for financial year 2022 could be materially reduced across a number of potential adjustments including stock and bad debt provisioning and revenue recognition."
However, it said that the audit will not impact its guidance for the current financial year. For the full year, Revolution Beauty expects net sales between GBP215 million and GBP225 million, and adjusted earnings before interest, tax, depreciation and amortisation between GBP18 million and GBP20 million.
By Sophie Rose; [email protected]
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