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InnovaDerma PLC: DEEP DIVE

Skinny Tan maker InnovaDerma to focus on new brand launches and accelerated growth

The company, which makes a range of cosmetic and beauty products, said it would also aim to increase product innovation after forecasting a strong finish for its 2019 financial year
woman sun bathing
OVERVIEW: IDP The Big Picture
Retail giants Boots and Tesco both stock Innovaderma's products
  • Makes Skinny Tan – the popular tanning product

  • Products stocked by likes of Tesco and Boots

  • First FDA-cleared premature ejaculation device to launch in UK this year

  • Profits expected to double in 2019


What it does

InnovaDerma PLC (LON:IDP) makes a range of beauty and personal care products, many of which you might have seen in the shops.

The company, which floated back in the autumn of 2016, makes the Roots Double Effect haircare range, as well as a men’s skincare range called Charles + Lee.

It also owns Prolong, which is the world’s first FDA-cleared medical device for premature ejaculation which it launched in the US and Australia in 2018. It is expected to make its debut in the UK and Europe later this year.

But perhaps InnovaDerma’s most famous product is Skinny Tan – the firm’s wildly popular range of self-tanning lotions.

In a nod to the quality of its products, major retail chains such as Tesco, Boots and Superdry stock InnovaDerma goods.


How it’s doing

In a trading update for the 12 months ended 30 June 2019, Innovaderma said revenues had increased by 21% to £13mln, and, as a result, pre-tax profits were expected to have more than doubled from the £670,000 reported in 2018, in line with expectations.

Gross margins had also “improved significantly”, the firm said, rising around 500 basis points year-on-year as a result of what it said was the agility of its business model which enabled it to scale its brands without increasing its overhead costs.

InnovaDerma said all its brands, including its popular Skinny Tan spray tanning product, had performed well during the year delivering both revenue and profit growth.

Skinny Tan, in particular, had contributed strongly as new product launches and a “significant increase” in the retail footprint of the brand, which is sold in 2,300 stores including Boots, Superdrug and Asda, helped drive sales.

The strong retail performance had also boosted the company’s cash generation over the year, meaning its cash balance for the period had come in at £1.7mln, which executive chairman Haris Chaudhry said was “ahead of guidance”.

Chaudhry added that going forward the group would be focusing on product innovation and launching new brands into new territories and categories, the combination of which would “further accelerate growth” in the new financial year.

The company’s full results for the period are expected in September.


Interview – Executive chairman Haris Chaudhry and CEO Kieran Callan


What the broker says

In a note commenting on the June trading update, analysts at InnovaDerma’s ‘house’ broker finnCap maintained their target price for the firm at 200p, saying the update provided a “strong platform” to develop the business further.

The broker added that the update should provide investors with “comfort” following a lack of newsflow since the company’s interims in February.

With the shares trading at around 104.5p as of 2 July 2019, Innovaderma has a market cap of £15.5mln.

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InnovaDerma PLC Timeline

CN Research
February 25 2019

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July 02 2019
The company, which makes a range of cosmetic and beauty products, said it would also aim to increase product innovation after forecasting a strong finish for its 2019 financial year

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