The headline figures from the Innovaderma trading statement were on the face of it quiet disappointing, however delving deeper there is not much to be disappointed about.

A profit of £0.65million is quite a significant drop from the £1million that was expected, but the reason seems to be that the company is investing for future growth. Which in my opinion could be quite stellar.
Skinny Tan looks like it is still doing well and recent product and brand extensions should see it still achieve a growth although in a slightly limited and seasonal market. It is trying to reduce the seasonal affects by launching body and facecare ranges, which if successful should provide year round income.
However, Roots looks like it could be the real growth driver in the future and the poor results look like they are in part due to the success of Roots. High demand and a new deal with Boots has seen supply issues, leaving the company unable to fulfil demand. Within the next few months Roots is doubling its shelf space within Superdrug and also launching in 359 Boots stores. I expect this is just the start of the relationship with Boots as when working capital allows I expect Roots to be launched in more stores and also Skinny Tan in January next year, once the Superdrug exclusivity ends. This should be really good news for Innovaderma as it reduces its reliance on one retailer. Which previously led to a profit warning after Superdrug ordered less than expected.

In fact a large part of the news release was about building relationships, hopefully some of these will be very fruitful indeed.

- Aspire brands has agreed a distribution agreement with Skinny Tan to get its products into stores in Scandinavia and the Benelux. If successful there is the potential in future to distribute other brands via Aspire Brands as well as using Aspire brand’s USA connections to do deals there.

- Douglas Beauty has launched Skinny Tan online, if successful there is a chance that it can launch in some of the companies 1,900 stores or potentially other Innovaderma brands could be brought on board.

- Sephora France has listed Skinny Tan online and this is also leading Innovaderma to create a company Direct to consumer (DTC) platform in that country, to hopefully…

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