// Revolution Beauty Group inflated its sales by £9 million to meet targets, an accounting probe has found
// An investigation was launched after its auditor flagged “serious concerns” over the retailer’s accounts
An accounting probe into Revolution Beauty Group’s accounts found it had inflated sales by £9 million to meet its annual targets.
The independent investigation by Macfarlanes and Forensic Risk Alliance found several concerns with the group’s accounts including personal loans made by its former CEO and insufficient checks on acquisitions, the company said on Friday.
Revolution Beauty hired investigators after auditor BDO identified “serious concerns” and said it was unable to complete the audit of the beauty brand’s 2022 accounts.
Chief executive Bob Holt said the probe identified “a number of serious issues” with the business’ previous senior management team and more needed to be done to address past deficiencies.
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Former chief executive Adam Minto and executive chair Tom Allsworth stepped down in October after the probe was launched.
The investigation found Minto and Allsworth had made personal loans and other investments worth around £1 million to one of the distributors and an employee, which had not been disclosed and “required investigation”.
The investigation found “materially larger than normal” orders placed by distributors in February, the last month of its 2022 financial year.
Around £9 million worth of sales to distributors “were only undertaken for the purposes of meeting sales targets for FY22″, as not all of the products sent were required by distributors.
As a result of the probe, the retailer now expects to make “a number of material adjustments”, in particular in relation to inventory provisioning and revenue for the year to February 2022.
This will have a “material impact” on the group’s adjusted profits which were forecasted to be around £22 million.
The listed company said it would work with BDO to complete its audit and release its 2022 results “as soon as possible” to lift its share suspension.
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