While Boohoo (BOO) has been no stranger to controversy in recent times, its fued with makeup brand Revolution Beauty (REVB) is perhaps the strangest twist yet after the online retail giant took a 26.6% stake in Revolution earlier this year. 

In a rapidly unfolding turn of events, Revolution Beauty released a statement today saying that boohoo's report that 74% of the company's shareholders voted against certain resolutions, including the resolutions to reappoint certain directors, were not accurate.

The latest RNS volley comes after a chaotic AGM which has since seen boohoo raise concerns about the behaviour of the Revolution Beauty's board. The meeting had seen three of its most senior directors fired and immediately rehired.

boohoo, alongside what it claimed were three-quarters of investors, had voted to oust the makeup brand’s chief executive, Bob Holt, its chief finance officer, Elizabeth Lake, and its chair, Derek Zissman, at the shareholder meeting on Tuesday.

boohoo wanted to appoint its own members to run Revolution, as it believed the ousted directors lacked the retail experience to return the brand to growth. Despite the vote, the three senior directors were rehired after the meeting by a remaining independent director.

Revolution hit back at boohoo, stating: "The Board reiterates its prior views regarding boohoo's attempted hostile takeover of the Company's board. The approach taken by boohoo towards Revolution Beauty is nothing short of value-destructive, opportunistic and self-serving.  At a time when, thanks to current management's tireless efforts, the Company's fortunes are looking up, with business back on track and restoration of its shares to trading on AIM, boohoo is seeking to stage a board and management control coup without making a general offer, or paying a single penny, to independent shareholders of the Company."

It also suggested boohoo's actions were merely an attempt to distract from its own recent trading and share price woes. "These metrics illustrate an interesting position from which to claim that only boohoo's strategy and their selected executive management can deliver growth for Revolution Beauty ," it said.

To add another layer of complexity to the feud, shares in Revolution Beauty resumed trading on AIM on Wednesday after it was suspended in September. The company said its FY22 accounts were not ready for publication at that time, but also that  boohoo's actions could have prevented the shares' readmission to trading and seen Revolution breach its banking covenants.

Following the readmission, Revolution Beauty confirmed on Wednesday that the management team would be granted share awards worth about £2 million, to reward them for the hard work done and the trading performance improvement delivered over the past 10 months. 

Boohoo then criticised the prospect of "significant remuneration and share awards for members of a self-elected board’," adding tha "it is notable that at no point did the remuneration committee seek prior shareholder consultation, or approval in relation to these awards, again contravening best practice in relation to corporate governance." 

Revolution Beauty's response was to quite reasonably point out boohoo's own "extremely management-friendly incentive packages" and chequered governance history, stating that "As shareholders will be aware, boohoo has a long and well documented track record of substandard corporate governance and legal, reputational, supply chain and shareholder engagement issues."

The last word in the matter? Almost certainly not.

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Corporate governance issues aside, boohoo has had plenty more of its own issues to wrestle with recently. During the pandemic, it enjoyed the advantages of increased online shopping activity, particularly among younger adults who were confined to their homes. However, having to compete with high street brands post-lockdown, combined with the cost of living crisis, has left the online retailer feeling the burn, swinging to a £91 million loss in results release last month. This sits in stark contrast to a profit of £92.2m a year before.

In Revolution Beauty’s interim results for six months ended 31 August 2022, revenue decreased by 4.2%, while its operating loss in H1 23 narrowed to £12.1m, down from £23.7m in H1 22. 

Revolution's digital revenue declined by 22%, also an indication of the resurgent fortunes of high street retail coming out of the pandemic. Revolution Beauty’s products are stocked on Boohoo’s website, but the trend toward high street and away from online may see Revolution becoming less focused on online as a platform for sales. 

Now, it is Boohoo’s turn to respond to the feud, as Revolution Beauty has requested that the online retailer explain what its future plans for Revolution Beauty are, should the 'hostile' takeover of the company's board succeed.

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