Superdrug profits soar 41% powered by celebrity beauty trends

By

Barbara Santamaria

Published
Jul 4, 2017

British health and cosmetics retailer Superdrug enjoyed a prosperous 2016, as revenue and profits surged by double digits helped by strong like-for-like sales and a face powder promoted by Kim Kardashian.

Superdrug has emerged as one of the UK’s largest retail survivors amid a tough trading environment and uncertain times. In accounts filed at Companies House, the retailer revealed on Tuesday that revenue for 2016 increased by 10.4% to £1.2 billion, while pre-tax profit rose 41% to £80.4 million.

During the year, Superdrug opened 23 new stores in prime locations such as Fosse Park, Leicester and Castlepoint and Bournemouth, and refurbished its existing stores with new cosmetics display units, as well as new concepts for skincare and fragrance counters.

BANANA POWDER

In 2015, Superdrug achieved a like-for-like sales increase of 6.6% and the strong momentum continued last year with sales growing by 7.8% on a like-for-like basis. All the main health and beauty categories contributed to the strong sales performance, but beauty was particularly crucial.

Sales of cosmetics soared by 14% in 2016 with Superdrug achieving a market share of 30% for the firm time supported by the introduction of new brands. The sales growth was also powered by celebrity beauty trends, which continued to influence customer purchases and prompted banana powder - a face powder championed by Kim Kardashian - to become 2016’s best-selling product.

Healthcare and wellbeing also grew strongly at 12 per cent, supported by range extension in diet and fitness plus the continued growth of Online Doctor, a service which dispenses direct to customers’ doors or nearby stores.

The retailer’s online channel continued to excel with e-commerce sales rising by over 60% during the period, outperforming the overall online health and beauty market. This was driven by improved website functionality and enhanced delivery solutions for customers, as well as better availability levels.

"We have had a strong year and are pleased with the company's performance,” said Peter Macnab, CEO of A.S. Watson’s Health & Beauty UK division, thanking team members for their work and contribution to the results.
"Looking to the future our strategy remains to offer customers everyday accessible health and beauty, giving them the beauty and health services they need, and an unbeatable selection of products at great prices, in a vibrant and friendly store environment."

2017 could be another year of growth for the A.S. Watson-owned retailer, says Zoe Mills from GlobalData: “Given its value proposition, Superdrug is in a prime positon to continue its success throughout 2017, appealing to those looking to buy into health and fitness trends on a budget. Continued investment in store rollouts and existing store refurbishments will also increase reach and appeal to consumers”.

However, the retailer could boost its performance even further by expanding its online channel. “Superdrug could improve online sales further by developing in-app browsing of its online catalogue and making its app transactional; this would increase impulse purchases on the go,” comments Mills.

Superdrug had 789 stores in UK and Ireland at the period end.