Family-run skincare brand Dr Roebuck’s in voluntary administration

Twin sisters behind skincare success Dr Roebuck’s blame COVID-19 for its fall into voluntary administration, but it had other problems.

Twin sisters Kim Devin and Zoe Kelly of Dr Roebuck's skin products.

Australian-based skincare brand Dr Roebuck’s has collapsed into voluntary administration, with the beauty brand’s runaway success in the US and Canada not enough to protect it from fallout of the coronavirus pandemic.

However it looks like the skincare business was also beset by other problems before the virus hit, with claims against it by a former employee in the US, and some creditors launching legal action.

It has also emerged that the family owners of Dr Roebuck’s tried to sell the company before it was placed into voluntary administration.

At a first creditors’ meeting, administrators to the failed business further raised concerns over the accuracy of Dr Roebuck’s accounts, and that inventory of more than $1.4 million on its books could be overstated and not properly accounted.

For many years the Australian skincare brand was a huge success, and was stocked in North America by powerhouse retailers such as Amazon, Sephora and Ulta Beauty.

It later taken up by Sephora Europe, as well as beating a pathway to South East Asia.

Such were the company’s global ambitions that last year Dr Roebuck’s attracted investment from Unilever Ventures, an investment arm of the giant multinational consumer goods company.

However the coronavirus pandemic and the resulting economic downturn have restricted its ability to shift stock worldwide and starved it of crucial North American revenue.

Now Dr Roebuck’s, developed further by twin sisters Kim Devin and Zoe Kelly to market an all-natural skincare cream invented by their parents, has been placed into voluntary administration with the appointment of Barry Kogan and Kathy Sozou, from McGrathNicol.

The beauty brand had humble beginnings. As Kim and Zoe grew up on Sydney’s north shore, their parents, both doctors, were unable to find treatments for both girls, who suffered from eczema and sensitive skin. So they created their own brand - Dr Roebuck’s.

When their father died almost 10 years ago, the sisters expanded the family business

overseas to sell on online shopping platforms such as Amazon, Cult Beauty and Revolve, to specialty bricks and mortar retailers like Sephora, Ulta Beauty, Shoppers Drug Market and Space NK, and direct to consumers through the Dr Roebuck’s website.

Documents prepared by the administrators show the twin sisters and their mother as the major shareholders.

At a first creditors’ meeting, creditors were told Dr Roebuck’s was sitting on inventories of $1.4 million but there was some question over the true value of that stock.

“We note that the inventory is overstated due to products being ‘sold’ to the overseas entities, but not properly accounted for in the books of the Australian company,’’ according to a slide presented to the creditors’ meeting.

There was also almost $1 million of loans made to the Canadian business, while the administrators also raised concerns over the state of the accounts of Dr Roebuck’s Australia.

“The administrators have not verified or audited the amounts, however due to inaccurate accounting policies and procedures, we do not believe that the management accounts

present an accurate representation of the financial position as at May 12, 2020,’’ a note on a slide said.

The administrators told creditors that the Australian company ceased to trade in April 2020.

The administrators said the directors of Dr Roebuck’s blamed the coronavirus pandemic for the collapse.

“The company has appointed administrators following the global shutdown due to COVID-19, Dr Roebuck’s directors told the administrators.

“Our primary market for distribution (USA) has been closed for over two months, with our stock unable to move due to restrictions. The Australian company relies on the USA market to fund its ongoing operations, the shutdown prevents this funding.”

Additionally, the global business has suffered from a former employee’s large claim against the business in America, which the business doesn't have the financial or legal capacity to fight, and a large number of creditors from 2019 have started filing legal claims.

The administrators said all the key accounts have pushed payment terms and delaying payment, so limiting cash flow. All accounts have scaled back on orders due to COVID-19, and cash to purchase core stockkeeping units for business continuity was not available.