01.16.23
In November, Revolution Beauty Group’s founder and chief executive officer, Adam Minto, stepped down amid an independent accounting probe. This week, it was revealed that the probe uncovered several concerning red flags—including overdue payments, inconsistencies over certain sales and undisclosed personal loans made by Minto and Tom Allsworth, the founder of Medichem.
Revolution agreed to pay Allsworth £26 million for Medichem, but £19 million of this was deferred and has not yet been paid.
The orders were placed at Revolution’s request and the goods had not been paid for by the end of that month. According to the probe, “none of the sales should have been recognized in full-year 2022” figures, and they were “only undertaken for the purposes of meeting sales targets.”
Furthermore, various discrepancies were identified in the investigation such as the sales volumes, timing, terms and rationale.
The transactions will be removed from the accounts, resulting in a £9 million reduction in sales.
The news comes shortly after Sara Staniford was named president of Revolution Beauty USA last week.
Overdue Payments from Acquisition of Medichem
According to Financial Times, the investigation found issues with the firm's acquisition of Medichem in October 2021 for £26 million, payment of which only £7 million was made with £19 million still overdue.Revolution agreed to pay Allsworth £26 million for Medichem, but £19 million of this was deferred and has not yet been paid.
Inflated Sales Figures
The probe also raised concerns over “materially larger than normal orders” sent to distributors in February 2022, the end of Revolution’s financial year.The orders were placed at Revolution’s request and the goods had not been paid for by the end of that month. According to the probe, “none of the sales should have been recognized in full-year 2022” figures, and they were “only undertaken for the purposes of meeting sales targets.”
Furthermore, various discrepancies were identified in the investigation such as the sales volumes, timing, terms and rationale.
The transactions will be removed from the accounts, resulting in a £9 million reduction in sales.
Undisclosed Personal Loans
The investigation also flagged loans and other investments of about £1 million to one of Revolution’s distributors, adding that none of these loans had been disclosed and it "required investigation."The news comes shortly after Sara Staniford was named president of Revolution Beauty USA last week.
