Revolution Beauty cancels sale, brings back founders to lead 'strategic reset'

(Sharecast News) - Revolution Beauty has terminated its sale process and announced a proposed fundraising to raise £16.5m, as it brings back its co-founders to lead a "strategic reset" to turn the business around - which includes sweeping redundancies. The news comes as the loss-making makeup, skincare and hair products manufacturer reported that sales over the year to 28 February were down by a quarter due to a lack of revenues from discontinued products amid a planned rationalisation of its product and brand portfolio.

Revolution said that, having not received an adequate proposal for the company since its formal sales process kicked off in May, it has terminated all talks with third parties and cancelled the formal sales process.

Instead, the company aims to raise £15m via a proposed placing and subscription, as well as £1.5m from a proposed retail offer.

At the same time, co-founder Tom Allsworth has been appointed as CEO, with interim boss Colin Henry stepping down with immediate effect, to lead a "revised and rebalanced business plan to set a clear path back to growth and long-term value creation", Revolution said. Fellow co-founder Adam Minto will also return to the business in a consultancy role.

The company said it wants to return to its "original formula for success - fast, trend-driven innovation combined with a product-led strategy". A key element of the plan will be reducing the company's cost base, which includes cutting £7.5m in annual staff costs through a "material reduction of headcount" across geographies and business functions.

"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," said chair Iain McDonald.

Revenues totalled just £142.6m over the last fiscal year, down 25.5% from £191.3m the year before, with adjusted EBITDA slumping 62.7% to £4.7m and statutory pre-tax losses totalled £16.8m, compared with a profit of £11.4m previously.

The results followed an 8.0 percentage point collapse in the gross margin to 38.2% after the significant impact from the planned clearance of non-core inventory.

Since the year-end, sales fell by 29% over the first quarter and by an estimated 25% over the second quarter, when compared with last year.

Shares were up nearly 9% at 3.8p by 0807 BST, having slumped by more than 80% so far this year.