Boohoo has expanded its growing beauty empire after making a “strategic investment” into UK beauty retailer Revolution Beauty.
The fast-fashion e-tailer more than doubled its shareholding in the company to 7.1%, after originally owning less than 3% of shares.
Boohoo said the investment builds on its existing partnership with the beauty business.
Revolution Beauty sells its products through several of Boohoo's direct to consumer brand websites and its online digital department store.
“The investment reflects Boohoo's belief in the growth potential of Revolution Beauty and it intends to be a supportive stakeholder and long-term partner,” Boohoo said in a statement.
Boohoo’s shareholder increase comes after stocks in Revolution Beauty plummeted by 55% in early August.
Shares fell after auditors for the beauty business discovered accounting issues that could have a “material impact” on its full-year 2022 results.
This has not dissuaded Boohoo, however, which has been steadily growing its beauty and cosmetics arm over the past few years.
This came to a head in February 2022 when the e-tailer entered the world of cosmetics with a 50-strong line of products in February 2022.
Skus across brows, lips, eyes and face joined Boohoo’s beauty offering, which also features products from St. Tropez, L’Oréal, Garnier and Maybelline.
Despite shareholder concerns, Revolution Beauty saw sales skyrocket by 73% for the three-month period ended 28 February.
Its mass category brand also brought in £22m in sales, following the volatility of the Covid-19 pandemic.
For the full trading year, Revolution reported 42% sales growth compared with 2021 to £194m, primarily due to success in the US, which has become the brand’s biggest single market.
The US market now accounts for 20% of Revolution’s business, and sales growth was up 27% for the full year.
“The group delivered a strong full year performance, in line with expectations, and driven by the strength of our omnichannel route to market,” said Revolution’s CEO Adam Minto at the time.
Beauty investments
Boohoo and Revolution Beauty have both made significant acquisitions in recent years, expanding their beauty offerings.
Revolution Beauty acquired beleaguered beauty brand BH Cosmetics for US$3.9m in February 2022.
The beauty retailer brought the American make-up brand back from the brink of collapse, after it filed for Chapter 11 bankruptcy last month.
A beauty partner of Australian singer Iggy Azalea and American rapper Doja Cat, BH Cosmetics said that a series of unsuccessful launches and the impact of Covid-19 had contributed to the downturn.
Boohoo, meanwhile, bought embattled department store chain Debenhams for £55m in January 2021.
The acquisition meant Debenhams was allowed keep its name and operations across e-commerce.
Its 100 plus stores, the heart of the department store chain, were permanently shuttered.
However, Debenhams’ proprietor had a change of heart, and announced in October 2021 that it is preparing to welcome customers back in-store to shop its best in beauty.
A teaser post on LinkedIn revealed the new destination will open in Manchester, UK, but no official details or opening dates for the new space have been released.
The post read: “Boohoo Group PLC don’t do shops… Until now. Well, until soon. See you in Manchester for make-up and stuff.”
The decision to reinstate one of its beauty stores is thought to have been at the hands of beauty brands themselves, which had been mounting pressure on Boohoo for Debenhams to return to physical retail.