Revolution Beauty will be calling in independent, external advisors to investigate its auditing failures, as the company warns over its full-year profits.
The cosmetics giant will be investigated by law firm Macfarlanes LLP and consultants Forensic Risk Alliance, after its auditors BDO raised “serious concerns” over its inability to publish an audit report for the latest financial year.
In August, the company issued a statement announcing it would not be able to release its final results and annual report by the 31 August deadline due its auditors concerns. As a result, Revolution Beauty had its shares suspended from the London Stock Exchange.
The investigation will also look into the validity of certain commercial arrangements that Revolution Beauty undertook, the group told shareholders.
The board is expecting that the probe will take several months to complete, although an exact timeline has not been specified.
The investigation committee will be formed by Derek Zissman, a non-executive director at the firm, and its chief financial officer Elizabeth Lake, who will lead the process alongside its independent advisers.
“We are taking BDO’s concerns very seriously and will conduct a full and independent investigation,” Zissman said.
“We will continue to keep investors and stakeholders fully updated as the process continues.”
On Friday, the company also warned that its financial results for the forthcoming year will be significantly below market expectations, despite a solid autumn and winter sales period. This is due to wider economic difficulties, including shifting consumer spending habits, cost inflation and the war in Ukraine.
In addition, next year’s results could also be impacted by accounting adjustments, as a result of the latest audit, when finalised.
The news comes after fashion retailer Boohoo made a “strategic investment” in Revolution Beauty back in August, acquiring a 7.1% stake in the cosmetics company.
