It seemed about time to post a short blog about what's been going on at King of Shaves during the first 3-4 months of 2011, as we get closer to the third anniversary of our Azor launch in June 2008. Firstly - we've had a REAL effect on the market, and in the advertising & product responses to the introduction of genuine system razor competition via our Azor. Much of this has been to the benefit of the consumer, with extensive price competition - in the UK and overseas, leading to a real reduction in the cost of shaving.
To recap, in June 2008 we launched our Azor razor in the UK to a great response - both from the shaving public, and from the press. The Azor, which shipped with 3 replacement Endurium Nano cartridges is just £4.99 (£5.10 now that VAT is at 20%) - which compares extremely favourably with the competition - both on the actual purchase cost, and the all important cost of replacing cartridges. Our launch mantra was "shave closer, longer, for less" - and this kicked off a HUGE defensive response by our primary global competitors, Gillette & Schick (Wilkinson Sword). Here are some headlines:
- Azor was the 3rd best selling system razor handle in the UK by volume in 2010, helping grow the market to over 12m handles sold at £50m+ value in the 52 weeks to 26 December 2010.
- In 2007, there were less than 50 "price promotions" (ie save £1, save 1/3) run by the two competitors. In 2008 this increased to nearly 200, and in 2009, to nearly 250 - and it has kept at this level ever since! In Autum 2010, Wilkinson Sword announced its Hydro razor (5 blades) with a rumoured £20m marketing spend, and in January 2011, Gillette announced its Fusion ProGlide, with a marketing spend rumoured to be double that of Wilkinson Sword!
- Azor cartridges conversion ratio (people repeat buying cartridges) were in line with other system platforms, at above 25%.
- Since launching the original Azor, we've evolved the handle to improve the ergonomics and cartridge eject mechanism, launched the Azor S (sensitive skin version), the Azor M (the alloy handle version) and in January 2011, launched the Azor 5 - our 5 blade, 'Endurium Nano' system razor optimised for sensitive skin, to compete with the competition's 5 blade offers, which has enjoyed remarkable sales in the last few weeks.
Although trading has for sure been tough in the UK, due to the depressed economic environment and the huge competition in our sector, sales of our core shaving software products have remained strong (selling 20-30,000 per week) and our core hardware products have developed a strong niche (selling 5-14,000 handles/week plus 26-35,000 cartridges per week).
Our latest SuperGels are now available in larger Boots and larger Tesco stores, our Azor 5 is available in Asda, Tesco & 1,200 Boots stores, along with our Kings range in over 600 Boots stores. Weekly sales for the week to Sunday 22nd May showed we sold over 34,000 AlphaGels & SuperGels.
For people with a strategic interest in King of Shaves, the company - following the £3.8m investment (via an equity & convertible bond investment) into Knowledge & Merchandising Inc., Ltd. (KMI - the parent company of King of Shaves prior to the demerger on June 1st 2009) the company raised a further £600,000+ via the 'Shaving Bond' offer (which matures in July 2012) and subsequently an investment of £1.5m from Kai Industries Co., Ltd. of Japan (our technology partner) totalling c£5.9m. Over the past 36 months, these funds have been utilised to ensure the King of Shaves brand has had the marketing spend to defend its space in the competitive UK market, and invest in all important IP (patents, trademarks, innovation) required for the brand to grow from the foundations established following the demerger from KMI. In addition, the distribution agreement signed with US company Spectrum Brands, Inc. (owners of Remington, the electric shave brand) has allowed the company to concentrate on substantial geographic expansion from mid/late 2011 in key North American, Latin American and other select markets.
The King of Shaves Company Ltd. accounts for the 17 month period ending May 31 2010 therefore reflect the stance taken by me (as CEO) and my Board of Directors to over-invest in UK marketing and all important IP protection as the company's sales increase in future years. Headlines were as follows:
- Turnover: £11.767m
- Of which £10.342m was UK, £1.334m was International.
- Gross profit: £5.879m
- Administrative expenses inc. IP, trade & consumer marketing: £8.312m
- Profit (Loss) for the period: (£2.758m)
- Current staff number: 17.
Whilst the company has made a loss (as expected, and projected by the management) for the period, it has the strong support and full backing of key and strategic shareholders, including Douglas King (my brother & co-founder of Aisling Analytics PTE, a leading commodities Hedge Fund) and Kai Industries Co., Ltd. of Japan (whose President & CEO sits on the main King of Shaves Holding Company Board of Directors). Indeed, to allow the company to continue to expand its IP portfolio and sphere of international operations, continuing investment may be sought (and sanctioned) to allow the King of Shaves brand the scope to develop in its fullest capacity.
Included in administrative expenses of course are items such as IP (Intellectual Property, product innovation & development and substantial UK marketing investments - which I chose to run at up to 40% of sales for a 2 year period to ensure both our hardware & software businesses achieved market relevance in an increasingly competitive, price reduction driven market).
As we look towards closing the 12 month trading period ending 31st May 2011, the company is projected to make a further trading loss, and as FY 2011/12 develops, via substantially increased (confirmed) international sales towards a trading profit by 31st May 2012 and thereafter.
The King of Shaves Company, and brand is in a pretty unique space. With two global competitors enjoying sales in the billions of dollars, it is clear that being the challenger brand is not an easy space to occupy. However, the scope and potential for future, profitable growth is huge, and I'm delighted to continue to be CEO of the company I founded 18 years ago, with a single shaving oil product, and first year sales of £300.
Interesting things are happening right now... Check out my next blog post!
