Boardrooms At War As Boohoo And Revolution Beauty Row Turns Ugly

British online fashion retailer Boohoo has not been a stranger to controversy over recent times but even it was left open-jawed this week following an extraordinary AGM at bargain makeup brand Revolution Beauty.

Itching to oust the existing management, Boohoo was not only snubbed by a sneaky boardroom bounceback but then also discovered those same directors are to share in a bumper bonus.

Boohoo raised “serious concerns” about the board’s behaviour at Revolution Beauty after an extraordinary meeting in which three of its most senior directors were fired and then immediately rehired.

With a 26.6% stake, Boohoo was among the almost three-quarters of investors who voted to oust chief executive, Bob Holt, chief finance officer, Elizabeth Lake, and chair, Derek Zissman at a shareholder meeting Tuesday.

However, they were reinstated directly afterwards by independent director Jeremy Schwartz.

What’s more, Revolution Beauty handed its top executives over 11 million shares as Holt, Lake and other senior execs were lined up to receive stocks worth nearly $3.8 million based on the company’s share price of 35c on Wednesday afternoon.

The reward was for restoring the company’s listing after its suspension from the stock market following an accounting scandal.

Suffice to say, this is an ugly row that’s only going to get uglier.

Boohoo Wants Own Board

Boohoo had wanted its own nominees to be appointed to run Revolution and in a statement Wednesday said: “Boohoo fails to see how such a board can claim to be acting in the best interests of shareholders, and is instead self-serving, as demonstrated by its actions over the last 24 hours.”

However, Revolution hit back by describing Boohoo’s approach as “hostile” and said that its protestations were “value-destructive, opportunistic and self-serving”.

Instead, it accused Boohoo of trying to take over Revolution, set up in 2014 to sell affordable make-up ranges to younger consumers, by stealth.

This week represented Revolution’s first annual meeting since its disastrous AIM market flotation two years ago. Its shares, once valued at $630 million, were suspended in September after the company’s auditors raised concerns about its financial accounts and the company failed to publish its annual results for 2022.

Upon listing, the company raised nearly $380 million and founders Adam Minto and Tom Allsworth became multi-millionaires. Its market value has since plunged as low as $75 million and an independent investigation eventually led to the resignations of Allsworth as executive chair and Minto as chief executive.

Trading in the shares resumed on Wednesday and they are up around 15%.

Boohoo And Revolution Bad Match

In truth, a fashion retail business taking a major stake in one of its peers was never likely to end well and analysts speculated that Boohoo had been throwing its weight around after taking a significant stake in the cosmetics business, which sells its makeup and skincare products online and through retailers including Ulta Beauty
ULTA
in the U.S. and Superdrug in the U.K.

Revolution insisted Wednesday that its board and management team had “worked tirelessly for the last 10 months towards resolving the historical issues” but Boohoo responded by accusing the beauty brand of a “lack of transparency” for hiding the terms of its free share awards in its annual report.

It has set out a list of demands for Revolution Beauty’s management team and pointed out that shareholders were not consulted on the free share awards, did not approve the terms nor approve the appointment of its two main beneficiaries as directors.

Now, Boohoo wants Revolution Beauty to publish the terms of the grant “without delay”.

It also wants to install its own candidates to run the beauty brand, with former New Look chairman Alistair McGeorge as interim executive chairman and Boohoo’s ex-finance chief Neil Catto as CFO, plus ex-THG Beauty CEO Rachel Horsefield.