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Cosmetic injections and skincare group Silk Laser (ASX:SLA) listed less than a year ago but has gained 30% despite COVID-19.
The Adelaide headquartered company was founded back in 2009, and has a network of nearly 120 skincare clinics across Australia, some of which lost trading days amidst the latest lockdowns.
But it still managed to achieve $23.5 million in network cash sales, which was actually up 14% from the prior corresponding period. It also completed the acquisition of the ASC Group and opened another three clinics in its own right.
Stockhead caught up with Silk Laser founder and CEO Martin Perelman amidst the quarterly result, which was revealed to shareholders yesterday.
How have you found life as CEO of a listed company?
“It’s been a really interesting journey, it’s my first foray into public life,” Perelman said.
“I’m a very operational CEO so transitioning from operational to operational, investor and public facing is a learning curve for me. It’s a definite transition I’m continuing to be involved with and learn from but I’m really enjoying it.”
And how has the past year been for Silk Laser as a company?
“Overall I think our industry and our company in particular has almost been a beneficiary from COVID in that there’s been strong penetration from consumers for our services.
“So we’ve seen a shift in our service mix post-COVID; a lot of people people spending more money on feeling and looking good. Some products like injectables are going well.
“So since COVID, our business has continued to prosper.”
Have lockdowns had an effect on Silk Laser?
“We’re a service based business, so last year from March 26 to June 5 we were closed completely and then in nearly every state we had rolling lockdowns as we went through those circuit breakers.
“Most recently we had NSW closed from late June through to a week ago – and then Victoria we were closed from July 15 until tomorrow.
“In New Zealand, Auckland is still closed but the South Island is now open.
“We fall into category of hair and beauty – so we re-open when hairdressrs re-open.
“In Victoria and NSW people are desparate to get a haircut and we’re opening at the same time.”
Do you expect the strong trade to continue?
“Yes, we do. We’re definitely going to see really strong trade in markets that are closed at the moment.
“We’ve been open in NSW for about week and a half and trade is strong, especially in the injectables category and we expect it to be similar in Victoria.
“We think that pent up demand will carry us through to Christmas.
“And then in the New Year things should normalise again but we’re expecting very strong trade over the coming periods. So into the new year it should be strong.”
Does this mean you might open new stores and if so where would you decide to put them?
“We’re budgeting for 6-10 per year. This year we’re slowing it down a bit because we just acquired ASC.
“The focus is bringing those two companies together, getting synergies and becoming one.
“We see opportunities for further growth. I think the big opportunity will be in Victoria, we have only 15 clinics there and we think we can get to 30.
“In New Zealand we have 14, they’ve signed four new leases, we think we can get to 30 in year or two. And more opportunities in Queensland and NSW – on the Eastern seaboard.”
How did Silk Laser come to be?
“It was founded in 2009, it was myself and three other partners. We were just a laser hair removal clinic and over next nine years to 2018 we evolved our service mix and got to nineclinics.
“In 2018 we were acquired by a private equity and it gave us resources and expertise to go on a strong growth path.
“So from 2018 to listing day at the end of 2020 we grew from 12 or 13 clinics to 56. That was nearly organic with the exception of one small acquisition.
“At the same time we really focused on changing our service mix from being predominantly a laser hair removal clinic to injectables as a predominant part of our business.
“We’re obviously now listed and did an acquisition in June 2021, took the keys six weeks ago, and our service mix has now changed.
“41% of our revenue now is injectables, 29% is laser hair and balance is skin care, skin treatments and body.
“We’re an all-encompassing cosmetics clinics and we’re 118 clinics and growing.”
Has Silk Laser had any difficulty with capital markets being based in Adelaide?
“We’ve been quite comfortable in regards to that due to national footprint and growth.
“We’re having good results and growing well so we’re getting investors and institutions onboard.
“We have a good quality list of institutions. Wilson Asset Management have become a primary shareholder of us and they’re very supportive. We’ve got an accomplished board as most of our support has come from our board.
“Our institutions have been very supportive. When we had to do a raise for Australian Skin Clinics, we had strong support there and they’re seeing and believing in the growth story.”
Wellness & Beauty Solutions (ASX:WNB) collapsed after JobKeeper was withdrawn. Where did you sit with that?
“JobKeeper was an important part for every small business in that sort of closure period. We are a service-based business and didn’t have an online presence at that stage.
“We used JobKeeper as intended, to keep our staff engaged during that first period.
“After the first quarter we didn’t qualify, so it was used effectively and helped us get through the most difficult period in many companies’ time.”
What does the next 12 months hold for your company?
“There’s a few focus areas. First and foremost is getting out of lockdown and working through that pent up demand and continuing to grow our business.
“We definitely see the growth in key categories, injectables, body category.
“As people have been in lockdown they’re looking forward to servicing themselves.
“We’re going to continue to focus on integrating with ASX the company that we bought. Looking at, how do we bring synergies, how do we do what Silk do well, what do ASC do well and taking best practices and bringing franchisees one company together so we’re one strong player in Australia and New Zealand.
“Outside of that we’ll grow organically in Australia and NZ, and continue to aim for 150+ clinics across Australia and NZ.
“We’ll add new services but they have to be services we think that’ll really continue to evolve our mix in an appropriate way. That’ll be focused around potential skin treatments and things like that but only minor additions.
“And then outside of that we see opportunity for our brand to potentially grow internationally. That’s something a bit down the track; something we’ll look to focus on if the points I just raised continue to work in the right way. And we believe they will.”
