Wellness and Beauty Solutions signs distribution deal with Chemist Warehouse, posts quarterly focused on profit turnaround

Wellness and Beauty Solutions ASX WNB nailKALM GBCo Chemist Warehouse
Wellness and Beauty Solutions expects the nailKALM deal with Chemist Warehouse to bring in revenues of around $500,000 in FY 2020.

Australian lifestyle company Wellness and Beauty Solutions (ASX: WNB) will launch its range of nailKALM anti-fungal products in Chemist Warehouse stores following the receipt of its first order from the pharmacy group.

The order was placed with Wellness and Beauty subsidiary The Giving Brands Company Pty Ltd (GBCo) and has a sales target through Chemist Warehouse stores of approximately $500,000 for the 2020 financial year.

Registered with the Therapeutics Goods Administration as a listed medicine, nailKALM is an anti-fungal dermaceutical lotion containing the proprietary active ingredient athrospira maxima (Amycot), which has been clinically proven to provide effective treatment for fungal nail infections.

Amycot is an organic, non-toxic and anti-inflammatory formulation derived from blue-green algae, which kills fungus and safely repairs the skin.

In 2018, GBCo was granted a five year licence by Biovite Australia Pty Ltd to manufacture, sell and distribute nailKALM in Australia and New Zealand.

According to the Australian Podiatry Association, nail fungal infections affect one in 10 adults and approximately 1.7 million Australians each year.

Exposure strategy

The Wellness and Beauty Solutions deal with Chemist Warehouse is another step in the company’s strategy designed to increase its exposure.

In March, it announced GBCo had secured licensee approval to engage retailers in Europe and North America for its Elle makeup range, as part of a four-year licencing contract with the internationally-recognised Elle brand.

Elle brand owner Lagardère Active Enterprises granted GBCo one of 125 worldwide licences to design, manufacture and retail beauty, skincare and related accessories products for Elle Colour Cosmetics, Elle Kids and Elle Baby, which will all be launched in the first quarter of 2020.

In April, Wellness and Beauty signed a contract with Myer Holdings (ASX: MYR) to design and manufacture three bespoke homeware ranges on its behalf, including personal care products and home fragrances.

The contract is expected to generate annual sales revenues of more than $1.4 million in 2020, with first revenues expected in the first quarter of that financial year.

The company also recently signed brand ambassador contracts with three Australian social media influencers as part of its focus on digital marketing to further drive brand awareness and retail sales.

Quarterly turnaround

Wellness and Beauty’s March quarter performance was centred on a turnaround in profitability and reduction in debt to reposition itself for future growth.

The company posted cash receipts of $3.1 million for the period (with GBCo accounting for almost $1m) and a closing cash balance of $3.4 million, compared to $5.7 million in the December quarter.

Operating cash outflow of $1.5 million was $900,000 lower than the previous quarter due to lower product manufacturing and operating costs, as well as reduced staff, interest and finance costs.

During the period, the company repaid $680,000 in outstanding loans, leaving it with $3.2 million in short-term funding capacity.

Marketing costs were higher for the quarter and mostly attributed to investments in ‘in market’ and ‘soon-to-be-launched’ GBCo brands as well as a modest investment in the rebranding of its failing Immersion Clinical Spa network.

Corporate costs were also higher, impacted by a $150,000 one-off cost to resolve legacy matters related to the company’s previous management structure.

In its quarterly report, Wellness and Beauty Solutions said the next quarter would “use funds to drive the development and growth of retail brands and achieve a break-even position after corporate costs across all [Immersion Spa] clinics”.

At midday, shares in Wellness and Beauty Solutions were trading 11.11% higher at $0.02.

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