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I think a optimistic tone has been set, giving investors a false sense of hope. No talk of Directors wages being cut etc. Also if sales are similar or worse than sales for the first half of the financial year and they are loss making in the first half. That will mean a loss will be made in the second half. First half of next financial year will again be loss making. Can 18 months of losses be sustained but directors still paid in full.
Btw I can assure you DTC will take a big hit aswell. People use fake tan when they are going out, with people stuck in doors demand will have a big drop. Also the tanning shops that used Skinny Tan will be closed so another source of revenue closed. I saw Boots closed there beauty section and only there pharmacy section was open.
People who are optimistic now will be shocked on results day.
Agreed John D - this is not a travel or entertainment share so whilst clearly impacted revenues were never going to be zero.
Also retailers all put in decent orders prior to peak tanning season so that should support revenues in Q3. Clearly Q4 could be bad if lockdown is extended into next few months.
FinnCap update below - no surprises.
InnovaDerma*
COVID-19 trading update
InnovaDerma provided a trading update (including Q3) that highlighted the recent
impact of COVID-19 on its distribution channels and customers. The
Government’s lockdown on 23 March authorising social distancing and only
essential travel and shopping has resulted in a sharp decline in sales through
retail stores. However, DTC channel sales, which accounted for c.60% of
revenues in FY 2019, continue to perform very well. Given that the Board is
reviewing its full-year expectations, we are withdrawing forecasts and our price
target until we have greater clarity over the impact.
?Trading update. Trading in the second half of the year began positively and was in
line with expectations up until the lockdown came into effect on 23 March. Since then,
the measures taken by Government to control non-essential movement and practice
social distancing have seen a sudden shift in consumer behaviour, which has
significantly slowed the sales of its brands through bricks and mortar channels (ie.
Boots, Superdrug, Tescos etc). The DTC channel, which accounted for c.60% of
revenue in FY2019 (c.£7.8m), continues to perform very well. InnovaDerma made the
point that it has healthy levels of inventory (c.£3.9m at 31 December), given the buildup to the peak self-tanning season, and that its supply chain remains strong. It also
continues to make timely deliveries to its customers.
?Cash. As at 31 March, InnovaDerma states that it had sufficient levels of cash and no
debt. However, given the UK Government’s lending initiatives for small businesses
during this crisis, it is assessing a debt facility with its bank, Barclays plc, should the
business require funds.
?Our thoughts. We had been forecasting c.£9.5m of revenues in H2 FY 2020, of
which c.£6.0m was expected to go through DTC channels with the balance (£3.5m)
through retail channels. Whilst March and Q4 retail sales are expected to be
significantly affected, it is less clear how the loss of purchasing power through job
losses may affect online sales and whether there will be a transition of the retail
footfall to online instead.
?Forecasts and valuation. On the back of this statement we remove our forecasts for
FY 2020 and FY 2021, together with our price target, until we have greater clarity
over the duration of the lockdown and impact that it has to retail channel sales and
whether, if at all, DTC channel sales are able to offset this.
Nice surprise!
But we had been hit more than some of the other companies I follow. With such a small amount of shares, the lack of liquidity will always have an exaggerating effect on any movements here up, or down.
about as positive as they can be in the circumstances - clearly retail massively impacted, but stores still open which means they will at least be selling some and DTC unimpacted. As over 50% of rev is via DTC this is great news (company's like Next have shut their DTC so their rev is zero).
Share price has declined c50% as per most other companies, maybe it is a little overdone.
Rev of £11m and £1m profit is not unrealistic based on poor retail for rest of H2.
Big Tesco order has been made too - now selling ST
https://www.tesco.com/groceries/en-GB/search?query=skinny%20tan
Some good words, and not so good in there.
"Singificantly slowed the sales of our brands through our bricks and mortar channels" is not so good, but to be expected (anyone would be silly NOT to expect that!)
But ..... "The Company's DTC channel, which accounted for c. 60% of revenue in FY 2019, continues to perform very well" is excellent to hear.
Lets hope they can fill the shelves fast enough and resupply the stores with fresh
stock.
https://www.bbc.co.uk/news/uk-52129008
It appears fake tan is still selling well at Boots!!!
guessing retails sells will be very low ATM so DTC is key.
Get your orders in - does sun screen and moisturisers as well as instant tanners.
Use code welcome20 at order stage to get 20% off ALL purchases
oh yes, and of course a director from one of our largest competitors, RB, has just bought 4% of the company.
She must see some value in our little company.
don't think i'll be in either Superdrug or Boots for quite a while!!
In hindsight maybe not the best time to launch Nuthing.
However, 2 more director buys in the last week (so now 5 in last month) is surely encouraging.
In this lovely weather and while self isolating took the dog for a long walk. Put a bit of wonder serum on my pale legs before wearing shorts for the first time in 2020 and also a bit of protect and glow sun screen on my face. I'm sure i'm not alone there, some people wear self tan all year round.
IMMO - is currently valued at £8m (IDP is £6m). It has never made a profit and has done 3 or 4 fundraises over last year or so. It's revenue is probably zero at the moment and may never fully recover - would you wear a VR headset without it being fully cleaned first? I still think there is value in IDP, in particular at these low prices. Anything under 40p looks great value IMHO
However, IMHO we are not at the bottom yet, next 2 weeks as UK and US death escalate things could get ugly.
Shandy no walking round Superdrug today looking at the displays.
Dynamo - do you get some kind of pleasure with your repeated negative posts? I see you do similar to BIDS and DISH repeatedly (neither of which i'm invested in BTW).
Of course there will be an impact on sales, 99% of companies are being massively impacted by this virus, which the biggest black swam event in the last 30 or so years.
FTSE 100 companies that are not travel or entertainment are still down over 50% so clearly the impact has been huge, and IDP has suffered accordingly.
Now it is valued at c£5m with a PE of c5 - so a revenue decline has already been priced in.
So what will the impact be? Who knows? I've read the Next statement last week and they have a similar business model (50% retail and 50% online) and they have estimated a 25% reduction in H2. This may be overly optimistic as it looks like stores will close.
For IDP Q4 is when most sales occur so at this point if we are in lockdown for 12 weeks this will have a massive impact. If people aren't going out sales of ST will clearly suffer.
However Q3 will probably be ok as had all the big retail purchases in anticipation for Q4.
So for H2 if sales were estimated at £10m i reckon 40% could be in Jan to March and £6m in Apr to June.
I don't think it's unrealistic to assume a 50% reduction in Q4 - so £3m rather than £6m.
As H1 did £5m and assuming Q3 still does c£4m then that's £12m for the year. Maybe profit for period will be c£1m.
Not terrible under the circumstances IMHO.
In our favour there are a few positives:
1, DTC will not be as greatly impacted as retail and over 50% of rev is via this channel
2. Retailers have already made big initial orders - Boots stocked up in late Jan
3. All sales in H2 will come out of existing inventory improving cash position
4. Food and pharmacies are still open so some sales will still occur (my local Boots has sold out of Wonder Serum!!)
5. We have no debt so this doesn't need servicing
6. Admin and salary costs are low ish
7. Marketing spend can be reduced accordingly
So it's not all doom and gloom is it??
good point franco - and of course supermarkets and pharmacies will be open regardless. It is possible that if this could be controlled in next 6 or so weeks and May and June allow people out as normal with next to no foreign travel/holidays some will use fake tan instead. It could actually boost ST sales.
Board member at Reckitt with the 4% TR1...go figure.
Historically in turbulent times people continue buying lipstick and makeup - it's one of the last things they want to give up as it give a semblance of normality. Whether it will be the case now I don't know but worth bearing in mind.
agreed Hero, Dynamo has suddenly appeared and is talking rubbish without knowing the company.
Yes IDP will be impacted - all companies are but we are not a travel, entertainment or pub/restaurant company.
In terms of Skinny Tan, our biggest seller by a mile, H2 is our big period.
Most revenue is in the last few months of the year (Apr to June) as the weather improves and people go on holiday. BUT early in H2 in preparation of this IDP make big deliveries to retail partners. These have already been made - Boots had a full range of ST products by end of Jan. With 2,100 stores this will be a 7 figure invoice. Additionally there will be big orders from SD (for both ST and new brand NUTHING) and also Tesco's first order of ST in over 700 stores.
These will bring in big revenues (c£2 to £3m in total) and have already been fulfilled. Depending on payment terms this money will be dropping in the next moth or so.
Clearly if the lockdown continues for say 3 months then non essentials will suffer - clothes, makeup, skincare etc, but if say we can break the back of this in the next 4 to 6 weeks then maybe things can return to some normality.
Not having any debt is a massive positive for any small company and IDP has none.
The Directors know the situation better than anyone and they are buying . They are both on very modest salaries - think KC got £56k last year.
.....and we're not even on AIM.
Are you going around posting on all stock pages that don't sell non-essential products?! This being 99.9% of aim companies. Your comments don't help...lots of people sitting on big paper losses that don't need to read those pointless comments.
IDP has a robust balance sheet & strength in key financial areas which will see us through the next couple of 'tough' months;
- HIgh Stock level (Cash Positive)
- High level debtors, strongly outweighing creditors (Cash Positive)
- Low Fixed Costs
- Great DTC channel that will generate instant revenue/cash
- No Debt/ No Loan interest
Most AIM companies will struggle to have 1 or 2 elements of the above. Easy to forget what we have at IDP!!
Kieran bought on Friday then - gives us some reassurance @ this uncertain time!
50p to 35p in a week, I guess they are selling only a couple now. 20p next week still overvalued
Stupid post. Of course they aren't 'panic buying' fake tan - However, for most customers it's a lifestyle product that shouldn't see them stop using it!
if you are female or have a wife/girlfriend and/or daughters i'm guessing you/they shave their legs.
Go onto nuthing.co.uk and once you've ordered add discount code NUTHING20 to get 20% off 1st order.
Help your company grow!!
Joe Bayer has bought again - if he had waited a week last week's purchase could have been bought at c20% less.
He can see the DTC volumes and knows how much the big orders for ST are for (Boots, SD and Tesco etc) so this is reasonably reassuring.
Clearly footfall in retail stores will be impacted in the next month or so but impact for IDP may not be over significant as over 50% rev comes from DTC
What's really annoying is £12k of share sales results in a loss of £400k from the company market value!! My shares are now worth considerably less than what I paid for them.
I think you are joining quite a lot of us. I had the statutory acknowledgement from my financial adviser today that my overall portfolio has dropped by more than 10%.
As if I didn't know.
GLALTH but it is going to be a slog from here.