Lipstick effect puts a brave face on beauty salons
● 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.
Felicia Ntisa in one of the Sorbet beauty salons she owns in Hyde Park Corner and Bryanston, Johannesburg.