Revolution Beauty co-founder quits as online retailer crumbles after audit probe scandal
- Tom Allsworth has stepped down as non-executive chairman
- Audit investigation found him and former Minto CEO made undisclosed loans
- Revolution Beauty overstated profits by around £23m and revenue by £9.6m
The Revolution Beauty co-founder has quit as the struggling online retailer unveiled “significantly lower” than expected results after an audit investigation revealed he had prepared the books.
Tom Allsworth, who was found guilty of making undisclosed loans, resigned as non-executive chairman effective immediately and was replaced by the company’s senior non-executive director, Derek Zissman.
The board change was announced alongside the company’s results for the year to the end of February 2022, which were significantly delayed after auditor BDO reported “serious concerns” about its accounts.
Revolution Beauty overstated profits by around £23million and revenue by £9.6million, according to its results
The results show Revolution Beauty overstated its profits by around £23m and its revenue by £9.6m.
The group, whose shares remain suspended, made an adjusted loss before ‘bad guys’ (Ebitda) of around £800,000, instead of the £22m profit it expected before the account irregularities surfaced. unveiled.
Revenue rose 17% to £184.6m, although it was below the group’s previously reported £194m.
Zissman told shareholders, “While these results are significantly lower than previous management’s market expectations, they nonetheless reflect a robust business with a strong brand, loyal customer base and significant potential for sales and profitability.”
He now expects the company to return to “normal trading” and make “meaningful” progress in resolving the issues raised in the investigation.
“We continue to take steps to ensure we have the right processes and governance in place across our business,” he added.
The investigation launched in September, which is now closed, had identified “a number of serious problems” in the operation of the company under the previous management.
These include loans from former chief executive Adam Minto and Tom Allsworth, founder of Medichem – which was acquired by Revolution Beauty in 2021 – to an employee and certain distributors.
None of the loans, worth a total of around £1million, had been disclosed to the board.
Managing Director Bob Holt said: “Integrity and honesty in all aspects of our business is paramount.
“This has been the focus of the new management team as we reset internal controls and processes to ensure we are able to achieve consistent operational excellence globally, and to the standards of a British plc.”
Revolution Beauty said it will release a current business update alongside its interim results in the coming weeks and its 2023 results by the end of August.
It will also update investors on its shares, which have been on hold since September last year.