AUS
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UK
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Highlights
- Market Potential: Australian injectables exceed $4 billion; laser hair removal boasts a 99% margin.
- Expansion Plans: Stormeur aims to raise $6-7 million for new outlets in Sydney and Melbourne.
- Profit Strategy: Uniform store design targets profitability within 12-24 months, expanding into cosmeceuticals.
Stormeur, an upcoming entrant on the Australian Securities Exchange (ASX) with the proposed ticker code STR, is poised to transform the beauty industry. Founder and executive chairman Dr. Vivek Eranki highlights the lucrative nature of the industry, revealing impressive profit margins that outshine even the results of intensive cosmetic treatments like wrinkle relaxation and skin needling.
A Booming Market
The local market for facial injectables, including Botox and lip fillers, is estimated at over $4 billion, while the laser hair removal segment stands at approximately $2.7 billion. The gross margin for injectables is around 60%, but laser hair removal boasts a staggering 99% margin, showcasing the profitability of these services. Stormeur aims to tap into this market by raising $6-7 million ahead of its planned October 21 listing, with the majority of the funds allocated for expanding its store footprint.
Expanding Retail Footprint
Currently operating 17 outlets under the Cosmetique brand, Stormeur is strategically focusing on opening four new greenfield locations, with two in Sydney and two in Melbourne. The business model is designed to be recession-proof, particularly appealing to the 18 to 35-year-old female demographic, who often prioritize aesthetics over other discretionary spending.
Despite being primarily female-focused, the company acknowledges the growing interest from men in cosmetic treatments, especially in the eastern states. Dr. Eranki emphasizes that the tightening of regulatory measures in the industry has created opportunities for larger, well-compliant operators like Stormeur to thrive while smaller competitors struggle.
Predictable Business Model
Stormeur’s business strategy mirrors that of successful franchises like McDonald’s, ensuring consistency in store design and operational costs. Outlets are typically located in capital cities and aspirational suburbs, with an initial setup cost ranging from $90,000 to $150,000. Stores generally break even within 12 to 24 months.
For example, a store in Cockburn, Perth, generated $780,000 in turnover last year, yielding a gross profit of $500,000. In the June half, Stormeur reported pro forma revenue of $3.44 million, with earnings before interest, tax, depreciation, and amortization (EBITDA) of $135,000, despite a net loss of $346,000. The majority of revenue—around 90%—is derived from injectables, with plans to increase contributions from laser hair removal significantly.
Future Growth Opportunities
With a growing focus on laser hair removal and the lucrative cosmeceuticals market, Stormeur is well-positioned for future growth. The company is also exploring opportunities in the laser tattoo removal sector, tapping into a trend among young adults.
As part of its initial public offering (IPO), shares are priced at 20 cents, accompanied by tradeable options. The total company valuation upon completion is expected to be between $16.5 million and $17.5 million.
Industry Dynamics
Stormeur will emerge as the only pure-play beauty company listed on the ASX following significant acquisitions in the sector. Notably, Wesfarmers (ASX:WES) acquired the Silk Laser Clinics chain for $180 million, and the trend of consolidation continues with other key players in the industry.
Given the significant interest in scaled and commercialized beauty businesses, Stormeur could potentially become a target for acquisition in the future, further enhancing its growth prospects.
