Revolution Beauty has brought back its former founders to “reset” the business after failing to secure a suitable buyer and grappling with tumbling sales.
Co-founders Adam Minto and Tom Allsworth, who resigned following a series of accounting issues, will return to the beauty brand which its chairman said has “lost its way”.
Revolution said it had not received any suitable offers since launching a sale process earlier this year, and it was therefore no longer looking for a buyer.
The move comes after Frasers Group, owned by British businessman Mike Ashley, said it did not plan on making an offer after previously exploring a possible bid.
Revolution, which sells make-up and cosmetics online and through concessions, instead announced plans on Friday to raise about £15 million by issuing new shares.
This will see Mr Allsworth return as the company’s chief executive to lead it through the turnaround, while Mr Minto will take on a consultancy role.
The co-founders intend to “reset” the business and will be carrying out a “new and refreshed strategy for Revolution Beauty, with a view to returning it to long-term profitability”, it told investors.
This will partly involve making further cost savings, which will include cutting staff to free up an extra £7.5 million by 2027.
Mr Minto quit as chief executive in 2022 when the company was thrown into crisis, sparked by auditors refusing to sign off on its accounts for the previous year.
It led to an investigation into the business and its shares being suspended from the London Stock Exchange.
The investigation also brought claims to light that Mr Minto and Mr Allsworth had made personal loans to an employee and to distributors which were not disclosed to the board.
Revolution had said it might take Mr Minto to court over the issues, but instead reached an agreement with its former boss.
Mr Minto’s new consultancy role will involve him working two days a week, for a salary of £160,000 per year.
Meanwhile, Revolution Beauty revealed a drop in sales over the latest financial year after struggling to clear discontinued stock.
Revenues totalled £142.6 million in the year to February 28, a drop of 25.5% compared with the previous year.
It also reported a pre-tax loss of £16.8 million, swinging from an £11.4 million profit the prior year.
Iain McDonald, Revolution’s chairman, said: “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.
“This will be achieved with a re-balanced strategy which will return Revolution Beauty to its original formula for success – fast, trend-driven innovation combined with a product-led strategy.”
Revolution’s share price was up by a 10th in early trading following the announcement.
