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InnovaDerma says flexibility helps maintain top-line growth, but higher advertising costs will hit profit margins

“The business has performed resiliently during the pandemic and the subsequent impact on earnings is disappointing,” investors were told

InnovaDerma PLC -
The company's top selling product is Skinny Tan

InnovaDerma PLC (LON:IDP) has said it performed “resiliently” during the coronavirus pandemic lockdown, though the health and beauty retailer has been hit by rising advertising costs.

With a flexible model, the Skinny Tan group said it has been able to channel efforts towards its established online platform after retailers such as Boots and Superdrug were forced to close their doors during the pandemic.

Customer traffic in the UK was up 27%, while in the US it was ahead 65%, Innovaderma said in a trading update. This helped pick up the slack from the bricks and mortar operation and contributed to an eventual 2.3% boost to revenues to around £13.2mln for the 12 months ended June 30, 2020

However, higher advertising costs, particularly on Facebook, will lead to “much reduced profits” compared with last year, the group confirmed.

Innovaderma said it is looking to diversify the platforms through which it markets its product lines, such as the haircare product Roots and the Charles + Lee men’s grooming brand, and it has acquired AI technology to help lower its costs.

Cash at the period-end was £1.3mln.

“The business has performed resiliently during the pandemic and the subsequent impact on earnings is disappointing,” investors were told.

“However, the business is financially sound with a strong solid capital structure and operating platform that is well-placed to respond to periods of uncertainty.

“As lock-down eases across many countries, the board continues to assess opportunities to strengthen the overall business with a clear focus on generating better returns on investment.”

Quick facts: InnovaDerma PLC

Price: 59.9 GBX

Market: LSE
Market Cap: £8.68 m

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