Revolution Beauty said its shares would be suspended after the UK online retailer confirmed it would not file audited accounts by the end of the month, capping a disastrous first year as a public company.
The group, whose shares have crashed nearly 90% since its July 2021 listing on London’s Aim, said it aimed to complete the audit and publish its annual report “within weeks”.
The initial public offering was one of the biggest on AIM last year, as the group, which sells beauty products online as well as through collaborations with chains such as Superdrug and Boots in the UK Uni and Ulta in the United States, attracted investors with the promise of capitalizing on consumers’ shift to online shopping.
Online fashion retailer Boohoo recently increased its stake in Revolution Beauty from less than 3% to around 12%, making it the third largest shareholder behind co-founders Adam Minto and Tom Allsworth.
Beauty Revolution said on August 2 that there were no major financial issues behind the filing delay, but nine days later revealed that its auditor, BDO, had raised “some accounting issues” that may have a “material impact” on the results.
He warned on Aug. 11 that “the group’s profitability for 2022 could be significantly reduced” due to potential adjustments including inventory, bad debt and revenue recognition.
Revolution Beauty shares will be suspended from September. The company said it expects its shares to start trading again when it files audited results for the 12 months ending in late February.
BDO declined to comment.
Revolution previously warned that destocking by major distribution partners, rising transportation and raw material costs and halted sales in Russia and Ukraine would hurt sales and profits this year.
The group has changed financial director, Elizabeth Lake replacing Andrew Clark who left to “take some time before taking on a new challenge”.
Boohoo said the decision to increase its stake, which came ahead of the latest revelations about the accounting issues, reflected its belief in Revolution Beauty’s potential, even as traditional asset managers such as Jupiter and Axa cut back. their shares in the company.
Revolution Beauty already sells products on Boohoo’s website and Manchester-based Zeus Capital is the appointed adviser to both groups. Boohoo declined to comment.
Revolution also has ties to e-commerce group THG, using its Ingenuity fulfillment platform for direct-to-consumer sales outside the UK.
Minto, which co-founded Revolution in 2014, told THG’s Capital Markets Day last October that the partnership had transformed its ability to serve markets such as the United States and Australia.
Revolution Beauty is one of several UK e-commerce groups whose shares have fallen since going public in London last year.
Shares of online home goods retailer Made.com fell more than 90%, while plumbers dealer Victorian Plumbing and second-hand market MusicMagpie both lost more than four-fifths.