Silk Laser Australia reports a surprisingly good 1HY23 result amidst 4-decade high inflation

Silk Laser Australia (ASX:SLA) managed to grow its revenues and profit even amidst high inflation. Theoretically, skin laser treatments should be discretionary and that is why its share price has underperformed. The results tell a different story, however.  

 

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Silk Laser Australia grows its revenues and profit

Silk Laser Australia’s network cash sales in 1HY22 increased 35% to $102.8m and revenue grew 21% to $49m. The reason for the discrepancy is that it operates with a franchise model. 

The company’s underlying profit increased 15% to $6.6m and its statutory profit rose 22% to $5m. It closed the period with 142 clinics, up from 122 just 6 months earlier, along with $19.4m in cash on the balance sheet. 

The average customer spend was $679 and the company’s Net Promoter Score was 80. 

 

But investorsare not giving it credit 

Despite Silk Laser Australia’s performance, its shares are down nearly half since its IPO.

 

 

The company hasn’t been helped by private equity firm Advent selling roughly half its stake after the IPO. While it retains a 12% stake, there isn’t confidence that it will stick around. 

Also not helping its cause have been lockdowns, the Omicron wave and fears that high inflation will cause people (mostly women in the case of this company) to cut back spending on these products.

And even though demand hasn’t decline, it did not grow exponentially either in the way that other retailers experienced. 

However, if the company can continue to deliver these results, we think it is inevitable that investors will notice eventually. 

 

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