New blood for sluggish Beauty Direct

By DITA DE BONI

Online cosmetics shop Beauty Direct is looking to revitalise its business model with pharmaceuticals and photo services, thanks to an optimistic new investor.

Pharmacist Gordon Ritson, owner of Life Pharmacy Queensgate and a director of the Life Pharmacy franchise operation, has bought almost 27 per cent of Beauty Direct and is pledging to turn the company around in the next year.

"I would say give me 12 months, give me a chance to share my vision with Bronwen's [founder Bronwen Evans] vision, and let's just see if we can turn it around," he said from Australia last week.

But Mr Ritson - who bought his 750,000 shares in the company for around 9.6c, a slight premium to their market price - walks into a company whose losses could be $100,000 worse than predicted.

Beauty Direct has told the market that its full-year loss to the end of March will be between $750,000 and $850,000. When it announced its interim result of $522,000 in December, its forecast operating loss in the second half was $205,000.

But Mr Ritson is gung-ho about the e-marketer's prospects, saying he thought the internet had been under-used for commerce in New Zealand.

"We sold 390 packets of a particular skin supplement off our shelves, and we had only a small space, and that business equated to $39,000.

"I asked a rep for the product who the biggest sellers of it were, and he said an internet site had sold over 3000 packets. I thought that's a market that I was missing out on."

Mr Ritson said he was excited about taking a controlling stake in the company. In the process, he bought out Cube Capital - formerly Damba Holdings - which bought an 11.4 per cent stake in Beauty Direct in March. At that time, Damba managing director Simon Wallace said the purchase was an opportunity for the company's investment team to work with Bronwen Evans to "help her further the gains already made with the company."

Last week, Mr Ritson had a similar view of his involvement.

"I've taken it on as a challenge. Beauty Direct has some problems - it tried to go into Australia and was unsuccessful in the bid there. But with the skills they've got and some I've got, I think we may be able to turn the company around."

He said a public company was a good vehicle to take advantage of deregulation that may take place within the pharmacy sector eventually, although he said it was possible for Beauty Direct to flourish by providing pharmaceuticals within existing tight regulations.

It is understood Beauty Direct is looking to move its head office to Wellington, closer to Mr Ritson's Queensgate pharmacy in Lower Hutt and the e-tailer's bricks and mortar operation.

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