Revolution Beauty Has a New Owner

Revolution Beauty auditors had serious concerns about the group's accounts due to financial problems. Now, Boohoo may be able to help Revolution Beauty regain.

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Following the change of ownership of Japanese makeup group DHC, British makeup group Revolution Beauty (REVB.L) has recently received a new owner—British online fashion retailer Boohoo (BOOH.L) has become its largest shareholder.

REVB.L is understood to be under suspension for failing to update its financials. Its development in China has also been lackluster.

REVB.L had nearly $700 million in revenue in six months

Founded in 2006, acquirer Boohoo is a leading British online fashion retailer that went public on the London Stock Exchange in 2014. BOOH.L's revenue for the six months ended Aug. 31, 2022, was 882 million euros (about $929 million), according to its latest earnings data.

According to BOOH.L's disclosure, after two capital increases, BOOH.L has become REVB.L's largest shareholder, directly holding 26.47% of REVB.L's issued share capital. At the same time, BOOH.L will officially assume the role of CEO of the group.

Back in August this year, BOOH.L acquired 7.1% of REVB.L's shares. In a filing at the time, BOOH.L said the investment also reflected its confidence in REVB.L's growth potential.

And in its latest acquisition filing, BOOH.L reaffirmed its confidence. It also stated that its intention is to become a co-stakeholder and long-term partner of REVB.L.

REVB.L is a British Mass Beauty and Personal Care business founded in 2014 by Adam Minto and Tom Allsworth. All of its products are inclusive and diverse, claiming to offer a wide range of products at different price points for consumers of all skin tones. All of its products are 100% cruelty-free and vegan, using sustainable and recyclable packaging whenever possible.

REVB.L currently sells its products directly to customers online through its website and offline in its brick-and-mortar retail sales. It has sold in 64 countries and territories and its main markets remain in the UK, Europe and North America.

In terms of products, REVB.L has a variety of categories such as color cosmetics, skin care, hair care, etc. Its new products launched frequently and has launched many co-branded products with Disney and Warner. It is understood that REVB.L's eight private brands currently have more than 4,000 SKUs, of which color cosmetics products account for 78% of all product revenue. Its colored cosmetic are also its core products.

Since its inception, REVB.L has experienced rapid growth and successfully went public in 2021. According to media reports, REVB.L is one of the largest initial public offerings (IPO) in London's junior market in 2021, when its valuation reached 500 million pounds (about $615 million).

According to REVB.L's earnings report, its revenue for the six months ended Aug. 31, 2021, rose 39 percent to 78.6 million pounds (about $97 million), and gross margin grew to 47.9 percent. Its color cosmetics category achieved 53% year-on-year revenue growth.

However, in the past two years, REVB.L has been plagued by financial problems, with its financial data update stuck in 2021. On September 1 this year, REVB.L's trading was suspended for failing to release its final results for the full year ended February 28. Based on the suspension offer, REVB.L's current market value is about 58.85 million pounds (about $72.4 million).

As previously reported by media, the group's auditors had "serious concerns" about the group's accounts. Because of this, the group's auditors refused to sign the annual accounts for February 2022, and the relevant authorities are currently conducting an independent investigation into the group, the results of which are not yet available.

New CEO assigned

Despite REVB.L's suspension and financial concerns, BOOH.L remains confident.

REVB.L's zero-cruelty and vegan is in line with the mainstream beauty trend in Europe and the US. The brand's fast-paced and youth-oriented characteristics also coincide with BOOH.L's fast fashion attributes.

It is understood that BOOH.L has not stopped the pace of expansion in the past few years. For example, in 2017 it acquired clothing brand Pretty Little Thing and women's clothing sales website Nasty Gal. In 2019, BOOH.L acquired British women's fashion clothing brand network Miss Pap and clothing brands Karen Millen, Coast, Debenhams, etc. In 2021, it acquired Debenhams' intellectual property assets in preparation for its transformation from a fashion and beauty retailer to a digital department store and marketplace.

In addition, BOOH.L was named CEO of REVB.L, where he has been serving as interim COO since October. BOOH.L said in a filing that over the past few months he has witnessed firsthand the excellent quality of REVB.L's employees, BOOH.L said in a filing that he has seen firsthand the quality of REVB.L's employees, brand awareness and product innovation over the past few months, and that he believes there is still tremendous opportunity for REVB.L's future growth.

REVB.L shows decline in China

REVB.L, which is a hot seller in the UK and North America, is certainly not missing out on the Chinese market, which is a major battleground for beauty groups.

On July 3, 2019, REVB.L officially entered Weibo, and its Tmall flagship store opened in the middle of the month. At that time, its main products included unicorn lipstick, highlighter blush series, 24-color REVOLUTION & Soph eyeshadow palette, chocolate eyeshadow palette, etc.

Since then, REVB.L has also been more active in China. It launched new products frequently, and often launching sweepstakes and holiday events. For example, in May-June 2020, REVB.L launched 4 trends of new products including highlighter, eyeshadow palette, mascara, etc. However, compared to its initial activity, REVB.L's account on Weibo has not been updated for a long time. Its last update was on February 27 this year. However, many Chinese consumers said that REVB.L’s makeup is patchy and so on.

At present, REVB.L Tmall overseas flagship store contains makeup and some skin care products, specifically eye shadow, mascara, lipstick, foundation, VC essence, collagen serum, etc. The price of its single products ranged from 39-179 yuan. Among them, the highest-selling product is 15-shade eyeshadow palette. Its price is only 69 yuan after coupon with monthly sales of more than 600 pieces.

Compared to the same price of Chinese affordable makeup, REVB.L's sales are not really high. Take the similarly priced Judydoll for example, its top-selling blush, cosmetic and eyeliner products all sell more than 100,000 pieces per month. This also shows that REVB.L is still positioned in the minds of domestic consumers as a "niche British affordable brand".

In fact, it is common that international beauty brands can’t meet China’s market, especially in the last two years under the dual impact of the epidemic and makeup market downturn. Many European and American makeup brands even choose to directly put off from the Chinese market.

But on the other hand, since this year, many international beauty giants are further deploying of the Chinese market, Estee Lauder upgraded the Chinese R & D center, Shiseido in the CIIE also said it will be in China to prepare for the second largest R & D innovation center in the world ...... International companies introduce new brands actively. The Chinese beauty and skin care market is still a fertile ground waiting for international brands to develop.