Why is Boohoo causing tears?
Boohoo, which holds a 26.6 per cent stake in Revolution, wanted to boot out Revolution’s chief executive Bob Holt, chairman Derek Zissman and chief financial officer Elizabeth Lake.
Boohoo wanted to replace them with three new people – New Look executive chairman Alistair McGeorge, Boohoo executive director Neil Catto and THG’s former beauty director Rachel Horsefield – to inject e-commerce knowledge into the brand.
It decided it would take action at the group’s AGM on Tuesday, which was put forward as a motion to be voted on.
Ahead of the meeting, Revolution slammed the plot, arguing the candidates put forward by Boohoo lacked the relevant experience running a beauty business.
What happened at the AGM?
Boohoo’s move to oust Holt, Zissman and Lake won the backing of shareholders, with 75 per cent voting in favour of their departure. This was largely expected by Revolution as Boohoo made a public announcement of its intention to vote against the three shareholders.
Also as Boohoo has a large stake in the business, it was expected that most of the shareholders would vote the directors out.
However, the trio were then allowed to be re-elected by independent director Jeremy Schwartz, as he was the last remaining director on the board and in order for the company to operate, and relist its shares on the AIM, it needed to have a board of directors in place. So Schwartz made the decision to re-elect Holt, Zissman and Lake.
Why did Revolution’s share price soar?
Revolution’s share price skyrocketed 58.8 per cent this morning when the market opened, but closed up 29 per cent yesterday.
This was the first time the group’s shares were traded since they were suspended back in September after auditors raised concerns about its financial accounts and the company failed to publish its 2022 annual results.
Last Friday, Revolution beauty published a trading update revealing a 60 per cent hike in sales year on year in the first quarter of this year. This positive trading update renewed investor confidence in the brand – sending shares soaring when markets opened.
What happens now?
The market is unsure if the war is over yet, Boohoo is understood to be unimpressed over share awards that have been granted to certain executive directors that shareholders voted off the board.
The share awards, which are nil cost meaning they are free, were granted upon Revolution Beauty’s trading suspension lifting and are currently valued at £2.7m (as per a 24.5p share price.) The awards were not put to a shareholder vote, contravening corporate governance norm.
So what happens next remains in question…