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InnovaDerma – “Appointment of CEO and Roots to be ranged in Tesco” enough to justify share price jump?

By Steve Moore | Wednesday 8 August 2018


Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.


I first warned on shares in InnovaDerma (IDP) in January as they fell towards 230p. Less than two months later it was a profit warning, though the shares are currently bouncing more than 25% higher today, towards 140p – a market cap of circa £20 million, on the back of an “Appointment of CEO and Roots to be ranged in Tesco” announcement…

The former is of non-executive here since December 2016, Kieran Callan, and latter that “haircare brand, Roots will be ranged initially in 432 of Tesco's 3,000+ stores in the UK from November”.

It is emphasised “Kieran has more than three decades of experience in senior management and Chief Executive Officer roles within FMCG businesses” and that the Roots in Tesco “initial launch sites represent some of the largest and key format stores for haircare nationally within Tesco”.

However, the former will also add cost - “Haris Chaudhry will remain as Executive Chairman” - and house broker finnCap updates that the announcements currently only “underpin our FY 2019 forecasts and provide potential upside to the longer term”.

Those forecasts are presently for a pre-tax profit of £1.7 million on revenue of £14.4 million, with the company currently stating “we look forward to updating our shareholders at our results in September”. However, it was previously updated that those results will show a pre-tax profit of approximately £0.65 million – that down from a prior year more than £1 million and comparing to £2.4 million forecast early in the year!

As such, before at least some delivery to suggest current year forecasts are achievable, I suggest this currently at best suitable for watchlists.


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