SILK zaps laser clinic competition, shares lift 13pc

Adelaide-based SILK Laser Australia (ASX: SLA) is outpacing listed competitors in the skincare space after announcing another period of growth in the December half, with revenue and profit both growing by over 20 per cent to hit $49 million and $5 million respectively.

At the same time competitor Artisan Clinics - owned by Vita Group (ASX: VTG) – posted a $6.4 million EBIT loss, although much more hair was removed from a $12.4 million impairment of goodwill on Vita's Skin Health and Wellness (SHAW) business whose brand stable includes Artisan.

SILK’s network cash sales reached $102.8 million, reflecting a 35 per cent rise as the group’s distribution sales - comprising brands SILK Skincare and Aesthetics Rx - surged by 65 per cent to generate $13.4 million. Strong sales in NSW and Victoria also led to franchise fees growing by 50 per cent to $9.1 million.  

Operating 142 clinics across Australia, SILK Laser Australia also owns brands Australian Skin Clinics (ASC), The Cosmetic Clinic (TCC), Unique Laser and Eden Laser Clinics – a company that was purchased two months ago for $8.4 million.

SILK has grown its injecting team from roughly 200 to 250 nurses, making it one of the largest specialist non-surgical clinic groups in the Australia and New Zealand (ANZ) region. While performing 2.2 million treatments in the half, average spending per customer also increased by $18 to $679.

Shares in SLA are up 13.3 per cent to $2.04 each at the time of writing.

“We’ve had a very busy first half, successfully integrating ASC and TCC, acquiring Unique and Eden Laser, launching new products and services, growing client numbers, and implementing new systems to create a more efficient support office and further improve performance,” SILK Laser co-founder and managing director Martin Perelman said.

“At the same time, we have been able to deliver strong results with growth across the business.

“I want to thank the entire SILK team, whose dedication and commitment has enabled us to provide the products and services our growing base of 1.6 million customers want, deliver another half of growth, and ensure we are well positioned to continue that trajectory.”

Meanwhile, 18-clinic operator Artisan Clinics saw revenue increase year-on-year by 12 per cent to $14.2 million for the half, with the group noting the prior year was impacted by COVID-19 lockdowns and the reopening of clinics.

A $3.8 million loss in underlying earnings was attributed to increased clinic costs in NSW, ACT and Victoria, as well as indirect corporate overhead costs.

“Whilst the group remains optimistic about Artisan’s medium-term business prospects, Vita’s Board has determined that it is prudent to moderate growth rate expectations and has revised the carrying value of the business given the changing macro-economic environment and ongoing impacts associated with COVID-19,” Vita Group said.

“As a result, Vita’s Board announces a $12.4m non-cash write-down of the group’s goodwill.”

The group also indicated Artisan’s revenue for January and February is estimated to land 18 per cent above the prior year, with client visits also increasing by 23.5 per cent. Last month saw the clinic’s overall earnings increase by 23.7 per cent year-on-year.

“Whilst the macro-economic environment remains uncertain, Vita is positioned to drive organic growth by maintaining its focus on the execution of its evolved business model programs including increasing in its marketing investment,” Vita Group said.

“As such, Vita continues to target monthly underlying EBITDA to break-even during FY24.”

Having sold its core information and communication technology (ICT) business to Telstra for $110 million in September 2021, Vita Group ended the period with $15.1 million in cash.

Shares in VTG are down 1.1 per cent to 86 cents each.