Must read: Revolution Beauty, Diageo, Mulberry, UBS/Credit Suisse
28th June 2023 08:53
Our head of investment rounds up the morning's big news.
REVOLUTION BEAUTY / BOOHOO
Revolution Beauty Group (LSE:REVB) shares have surged by over 50% today after trading was reinstated now that it has enough directors. It comes after the affordable make-up brand reappointed CEO Bob Holt to the board as well as CFO Elizabeth Lake and Chairman Derek Zissman, despite opposition from shareholders including Boohoo Group (LSE:BOO). They voted against these appointments at an extraordinary annual meeting yesterday. Boohoo has an approximate 26.6% stake in the business.
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Tensions are running high between Revolution Beauty and Boohoo which have different views on how to deal with the problems. Revolution described Boohoo’s alternative view to install its own choice of appointments to the board as “cynical, short-sighted and misguided”. This morning, Boohoo said it “wishes to record the serious concerns it has regarding the conduct of the board of Revolution Beauty.” It added that it “fails to see how such a board can claim to be acting in the best interests of shareholders.”
Revolution Beauty floated on the AIM market in July 2021, raising £300 million to achieve a valuation of £495 million. Even after today’s bounce, shares have still fallen sharply since its IPO from 160p down to 19p before its suspension on 1 September last year, when its auditors BDO highlighted concerns about the numbers, meaning that Revolution Beauty couldn’t published its financial results.
DIAGEO
Diageo (LSE:DGE) has ended its business relationship with Sean Combs, also known as P Diddy, after the rapper sued the drinks giant, accusing it of neglecting his tequila brand and claims of racial discrimination. However, Diageo responded by saying he made false and reckless allegations, including numerous defamatory and disparaging accusations of racism on the part of Diageo and certain of its senior executives. Combs’ legal suit filed last month alleged that he wasn’t allocated sufficient resources compared to other celebrity brands.
The two sides who are at loggerheads could see themselves faced with a lengthy legal battle as Diageo looks to sever ties with its DeLeon joint venture with the rapper. Diageo first worked with Combs in 2007 to help promote his Ciroc vodka brand.
MULBERRY
Mulberry Group (LSE:MUL) reported full-year underlying pre-tax profit of £2.5 million versus £14.6 million a year ago. However, revenue rose by 4% to £159.1 million and group sales for the first 12 weeks of the financial year is 6% ahead of the previous year. Retail sales in Asia Pacific is currently 34% ahead of the same period last year, partly thanks to stores in Australia.
Despite a weaker bottom-line performance, Mulberry said it is making good progress and said it continued to deliver on its strategic objectives despite the macroeconomic uncertainty. Significant investments have been eating into its profits, but investors are hoping that this will be a long-term strategy that pays off despite the short-term hit to profitability.
Encouraged by a strong top line performance, shares in the handbag maker are trading higher and are up 13% so far this year, outperforming the wider market.
UBS / CREDIT SUISSE
UBS is planning to cut over half of Credit Suisse’s workforce from next month following its takeover of the embattled Swiss lender. According to a report from Bloomberg, staff in London, New York and in parts of Asia are at risk, with UBS looking to downsize the combined group by around 30% or 35,000 people.
At the start of June, UBS’s second-time CEO Sergio Ermotti said it will be painful, hinting at headcount reductions and difficult decisions. He helped steer the Swiss lender through the challenges after the global financial crisis during his previous period as chief executive between 2011 and 2020.
Shares in UBS fell sharply in March amid the US mid-sized banking crisis and the turmoil at Credit Suisse. The stock has been attempting to regain ground, although it has been a bumpy recovery with shares struggling again over the past couple of weeks.
It was inevitable that Ermotti would have to make tough decisions following the forced takeover and synergies will be a key part of the tie-up. Shares in UBS are trading higher today, buoyed by the prospect of a lower cost base.
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