Lip­stick ef­fect puts a brave face on beauty sa­lons

Sunday Times - - Business Times - By PENE­LOPE MASHEGO

● At a Sor­bet salon in Jo­han­nes­burg’s Hyde Park Cor­ner mall, Iona Ma­clean sat for her man­i­cure on Wed­nes­day, chat­ting and laugh­ing with the staff while a glass of sparkling wine bub­bled next to her.

She has been fre­quent­ing the Hyde Park Cor­ner branch for four years, and her rea­son for com­ing back is the “ex­pe­ri­ence”.

Ma­clean is one of thou­sands of South Africans, in­clud­ing men, be­hind a surge in the roll­out of beauty sa­lons.

Ma­clean said she liked the cheer­ful­ness of the shop, the qual­ity of the work and that it al­ways made a plan to fit her into its sched­ule for her bi-monthly man­i­cure and pedi­cure.

“I like that the staff re­mem­ber who you are,” said Ma­clean, who has missed only one ap­point­ment since she started com­ing to the salon.

Part of that spe­cial feel­ing comes from the salon’s owner, Feli­cia Ntisa.

It was hard to miss the en­er­getic Ntisa, who com­manded the room’s at­ten­tion when she walked in, with staff and cus­tomers tak­ing the op­por­tu­nity to have a chat and a laugh with her.

Ntisa, who also owns a sports mar­ket­ing com­pany, opened the Sor­bet fran­chise in 2011 and has a sec­ond fran­chise in Bryanston that she opened the same year.

Ntisa said 91.6% of her busi­ness at Hyde Park comes from reg­u­lar cus­tomers while reg­u­lars ac­count for 89% of her Bryanston cus­tomers.

Five months ago she opened a Sor­bet Man, also in Hyde Park, which of­fers hair­cuts, beard care, wax­ing, man­i­cures and pedi­cures as well as mas­sages.

How­ever, she has not been ex­empt from the tough econ­omy, which has af­fected her busi­ness.

“There has been growth but ob­vi­ously not as rapid as it was in the be­gin­ning. And I think this year in par­tic­u­lar has been prob­a­bly the worst year to be hon­est, but I’m blessed be­cause of the lo­ca­tion,” said Ntisa.

In ad­di­tion to its beauty sa­lons and Sor­bet Man, the 13-year-old group also has dry bars, where cus­tomers can get a quick hair­cut or man­i­cure.

Busi­ness has been good for Sor­bet, which has grown into a 200-salon-strong fran­chise group since Ian Fuhr founded it in 2005. The busi­ness was bought by Long4Life, an in­vest­ment com­pany owned by Bid­vest founder Brian Joffe, for R115m in Novem­ber last year.

Said Rudi Rudolph, the group’s CEO: “An amaz­ing part about this busi­ness is that there is growth.

“Ob­vi­ously we’ve slowed down but we are not neg­a­tive, we’ve got pos­i­tive growth. The beauty of the busi­ness is that even in bad times, hair grows, nails grow. It doesn’t stop.”

Sor­bet, to­gether with Long4Life’s other per­sonal-care and well­ness brand Lime­light, gen­er­ated rev­enue of R56.2m in the six months end­ing Au­gust 31.

Lester Davids, an an­a­lyst at Unum Cap­i­tal, said the need for peo­ple to main­tain their im­age de­spite a weak econ­omy is what makes the beauty sec­tor at­trac­tive.

“Con­sumers may look to cut other ex­penses be­fore cut­ting on beauty pur­chases and re­lated rou­tines. This is of­ten re­ferred to as the ‘lip­stick ef­fect’, where con­sumers would con­tinue to buy an item of beauty, de­spite a weak­en­ing of their fi­nances,” said Davids.

But for Im­balie Beauty it is a dif­fer­ent story. The com­pany has ex­pe­ri­enced over a decade of hard­ship since list­ing on the JSE’s AltX in 2007. It is con­sid­er­ing delist­ing.

The group’s share price has crashed 94% since it listed and rev­enue for the in­terim pe­riod end­ing Novem­ber fell to R22.4m from R32.2m in 2017.

To add to its woes, the group’s shares were sus­pended by the JSE af­ter its au­di­tors is­sued a dis­claimer against it.

Im­balie owns the 38-year-old Placecol Skin Care Clinic, Dream Nails Beauty and Per­fect 10 Nail & Body Stu­dio.

Said Im­balie CEO Esna Colyn: “It’s been tough, 2016 was ex­cep­tion­ally tough, in such a way that I ac­tu­ally went to Mr Kevin Hed­der­wick from Famous Brands [now re­tired] and said ‘Kevin, I need men­tor ses­sions be­cause I don’t know where to go from here’.

“So that was very tough when the econ­omy turned and from there on we ac­tu­ally did look at delist­ing our com­pany but we haven’t fi­nalised it as yet.”

She said she had noth­ing fur­ther to share about the delist­ing be­cause she was wait­ing to hear back from a cor­po­rate ad­viser she met with to dis­cuss this on Mon­day.

Im­balie Beauty, which has 150 fran­chises, made the de­ci­sion to look into delist­ing be­cause the com­pany is too small.

“In the cur­rent mar­ket we are too small to be listed, that is the truth, and you know to re­main listed is costly,” she said.

Colyn said the group orig­i­nally de­cided to list the com­pany to raise cap­i­tal from in­sti­tu­tional share­hold­ers.

She said the group was work­ing on turn­ing its busi­ness around by fo­cus­ing on well­ness in ad­di­tion to beauty, and step­ping up its mar­ket­ing strat­egy.

Davids de­scribed the tim­ing of the list­ing in 2007 as “un­for­tu­nate” due to how close it was to the peak of the global eq­ui­ties bull mar­ket and a di­min­ish­ing ap­petite for eq­ui­ties fol­low­ing the global fi­nan­cial cri­sis.

He said the low liq­uid­ity of the share and the size of the com­pany mean it may not have been at­trac­tive to some large fund man­agers.

Un­like Im­balie, he said, Sor­bet had the back­ing of Long4Life, a com­pany with the ex­pe­ri­ence of se­rial en­trepreneurs and op­er­a­tors in the con­sumer space.

Davids said that Sor­bet was a well-known brand, which is some­thing that Im­balie may be lack­ing, pos­si­bly due to hav­ing a smaller mar­ket­ing bud­get, and the mar­ket con­di­tions.

Pic­ture: Thapelo More­budi

Feli­cia Ntisa in one of the Sor­bet beauty sa­lons she owns in Hyde Park Cor­ner and Bryanston, Jo­han­nes­burg.

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