Revolution Beauty reveals potential legal action against founder and ex-boss

Under-fire cosmetics firm Revolution Beauty has revealed possible legal action against its founder and former chief executive Adam Minto.

The group – which also faced a call on Monday from its biggest shareholder, Boohoo, to replace the current top bosses – said it sent a letter of claim to Minto last month alleging that he breached his duties to the firm.

It said some of the matters alleged contributed to the delay in the group’s 2021-22 results, which has led to the suspension of shares since last September.

The firm said it was looking to recover “material sums” after being hit by hefty costs as a result of the matters alleged.

It has not yet received a “substantive” response from Minto or his legal representatives and has set a deadline of 7 July for him to do so.

Revolution Beauty said: “The company takes these matters extremely seriously.

“It is important for shareholders to note that there can be no certainty on the outcome of these legal proceedings, and the company will make further updates to shareholders as appropriate in due course.”

It comes amid a turbulent time for the firm, which on Monday saw Boohoo reveal plans to vote against the reappointment of Revolution Beauty’s CEO Bob Holt, Chairman Derek Zissman and CFO Elizabeth Lake at the firm’s upcoming annual general meeting on 27 June 2023.

Boohoo, which owns a stake of around 26.6% in the company, has requested a separate general meeting to oust the three bosses and replace them with Boohoo Non-Executive Director and former New Look Chairman Alistair McGeorge as Interim Executive Chairman and ex-Boohoo finance boss Neil Catto as CFO.

Revolution Beauty said on Monday it was “reviewing the content and validity” of Boohoo’s meeting request with its advisers and would make a further announcement in “due course”.

It was thrown into crisis last autumn when shares were suspended after auditors refused to sign off its accounts for the last financial year, which sparked an investigation into its finances.

In January, an independent investigation by Macfarlanes and Forensic Risk Alliance found Revolution Beauty had inflated sales by £9 million to meet annual targets and unearthed concerns with the group’s accounts, including claims that personal loans were made by Minto and Chairman Tom Allsworth to an employee and to distributors.

The pair were found to have made loans and other investments of around £1 million to one of the distributors, and Minto provided a £300,000 personal loan to the owners of a separate distributor, which were not disclosed to the board at the time.

The probe also alleged that insufficient checks had been made on acquisitions.

The investigation was launched after Revolution Beauty’s auditors flagged serious concerns over the group’s accounts.

Minto and Allsworth quit following the investigations.