Revolution Beauty shares fell sharply on Wednesday after the cosmetics firm flagged a £11.3million hit to earnings related to the clearance of discontinued stock. 

The group is in the process of a turnaround after a 2022 probe found serious accounting irregularities, sparking costly legal battles, a boardroom coup and a near-collapse in its valuation.

Revolution Beauty told shareholders a cost-cutting and simplification plan had driven a 20 per cent year-on-year decline in revenues to £72million over the six months to 31 August.

The decline also reflects 'significant stock clearance activity', with the group focused on clearing slow-moving discontinued inventory from previous years in efforts to generate cash.

Revolution Beauty said: 'As a result, the Group has determined that it is necessary to recognise a one-off, non-cash stock provision of £11.3million in the first half to reflect the net realisable value of the remaining old inventory.

'This will allow management to realise value and generate cash for future operations.'

Revolution Beauty shares fell by more than 20 per cent at the open, before recovering to trade roughly 10 per cent lower at 16.1p by mid-morning. 

They are more than 90 per cent off their 2021 IPO price of 170p. 

But Revolution Beauty highlighted 6 per cent growth in its core range, accelerating to 16 per cent in the second quarter versus the prior year.

Margins were also boosted by cost-cutting efforts, with operating costs excluding marketing and administrative costs down 31 and 25 per cent respectively year-on-year.

Marketing costs increased 8 per cent versus the prior year, reflecting 'investments in brand marketing to underpin future growth of core products'.

Revolution Beauty expects revenues to decline at a slower pace in the second half with a return to growth in the fourth quarter of the year, thanks to 'new strategic growth initiatives'.

Boss Lauren Brindley said these included a 'reinvigorated pipeline of make-up innovation, the launch of our new skincare range and the global expansion of our budget brand, Relove'.

She added: 'This year is a transformational year for the company, as we focus on simplifying the business, improving our operational efficiency and positioning ourselves for profitable and sustained success.'