British cosmetics giant Sk:n collapsed this week, reportedly coming as a surprise to staff and customers alike.
The 34-year-old Birmingham-based company had 70 locations across the country and employed hundreds of staff across branches in cities including London, Manchester, Bristol, Liverpool and Cardiff. The business, which was acquired by private equity firm Tryspan in 2019, offered a range of dermatology treatments, from laser hair removal and tattoo removal to skin peels.
The Sk:n website states only that it had ceased trading because it had been unable to secure investment, and a recorded message on the company's phone number repeats the same information.
“Unfortunately, as of July 17, the SK:N Group, which includes SK:N Clinic, Hurley Medical Group, Skin Brand, Skin Expert and ABC Medical, has ceased operations,” the company said.
Customers say bookings were suddenly cancelled with no refunds and staff have flooded social media to claim they've lost their jobs without notice and have yet to be paid.
Most people seem unaware that it had any financial problems at all, but the latest Companies House accounts for Lasercare Clinics Harrogate Limited (trading as Sk:n) show that the company had debt of £35 million which was due to be repaid in full by 2026. Public disclosure documents for the financial year ending 31 August 2022, the most recent available, show that the company made a pre-tax loss of £7.2 million in 2021 and a loss of £4.5 million in 2022.
Many of Sk:n's procedures are funded directly by patients, and the company says it is “cyclical.” The coronavirus pandemic, which has hit the beauty industry hard, may have also contributed to Sk:n's downfall.
Lasercare Clinic Harrogate (Sk:n) is part of the Heavy Topco group, a non-trading company, and Sk:n's management capabilities are directly related to its position in this group, Companies House documents state.The company also relied on funding from a holding company called Heavy Bidco to repay its debts.
Heavy Topco had net debt of £62.4m and made an after-tax loss of £16.2m for the financial year to 31 August 2022, according to the Companies House.
Audit firm Grant Thornton said it had not identified any “material uncertainties” that “cast doubt” on the company's ability to continue as a going concern for at least 12 months after its financial statements are authorised for issue in September 2023.
Grant Thornton complied with all its legal obligations but just 10 months later LaserCare Clinic, Harrogate, was placed into liquidation along with several other companies in the group.
Winding up orders have been made against five companies in the Sk:n group. The court appointed administrator Joseph Sullivan as liquidator for Lasercare Clinics (Harrogate), LCHMG Limited, ABC Lasers, Cosmeceuticals and Cellite Clinic.
The companies in liquidation traded under the brands Sk:n, HMG, Skinbrands, The Skin Experts, ABC Medical and ABC Lasers. Other Sk:n group companies continue to trade as normal.
Jo Marshall, head of Edge Tax accountancy, says situations like this are “unfortunately all too common” and she believes more needs to be done to improve auditing standards across the industry.
“This is an industry-wide issue. I think audits should be more rigorous, look at the whole group and not just rely on director representations. Accounting standards need to provide more substantive audits and a clearer picture of companies' positions.”
“In the end, the group expanded too quickly. It was clearly an acquisitive business, but as the COVID-19 pandemic reduced cash and interest rates rose, it was unable to generate sufficient earnings to repay the interest. It had no tangible assets and, although performance improved, it was not enough.”
TriSpan and Grant Thornton have been contacted for comment.