July’s bombshell ‘overnight closure’ of prominent UK aesthetic chain SK:N’s 70 clinics across Britain followed closely upon similar unforeseen English dramas at Laser Clinics UK in April and Elan Laser Clinics in February.
As hundreds of angry clients and distressed staff again flooded mainstream media headlines and social media with tales of personal misery and financial disaster, this latest aesthetic industry upheaval once more highlighted the dangers when bullish rapid expansion is exposed to the uncertain realities of up-and-down economic cycles and vacillating consumer commitments post Covid.
Fortunately this time, a ‘white knight’ saviour has equally dramatically appeared via Scottish Professor David Moulsdale’s Lorena Cosmetics.
Major UK aesthetic company SK:N collapsed without warning in July, leaving multitudes of irate customers and hundreds of aggrieved staff at 70 sites across Britain in shock.
Previously SK:N’s website boasted it operated ‘the largest network of specialist skincare clinics in the UK’; that bragging was replaced overnight with the bombshell announcement the company had ‘undertaken an extensive process to secure investment to enable it to continue trading, but sadly we’ve been unsuccessful’.
Founded in 1990, the Birmingham- based business was acquired by private equity firm TriSpan in 2019 and operated 17 clinics across London alone, as well as prominent branches in major cities including Manchester, Bristol, Liverpool, Glasgow and Cardiff, plus high-profile sites in Wolverhampton and Leamington Spa in Warwickshire.
SK:N also had ‘more than 450 consultants, doctors, nurses and medical practitioners operating across England and Scotland’, reported bbc.com, and provided ‘services from tattoo and wart removal to acne and rosacea treatments, as well as lip filler and thread lifts’.
Similarly, business-live.co.uk described SK:N as a major provider of a variety of dermatological treatments from laser hair and tattoo removal to skin peels, but noted a sudden ‘post on SK:N’s website gave no other explanation than that it had ceased trading after failing to secure investment’.
Without warning, the chain’s telephone number issued a recorded message, bluntly announcing: ‘Unfortunately as of July 17, the SK:N Group, including SK:N Clinics, the Harley Medical Group (a cosmetic surgery firm), Skinbrands, The Skin Experts and ABC Medical (a skin technology company) has ceased trading.’
The same morning, a surprise poster appeared in the window of its Birmingham city clinic announcing: ‘We are very sorry to inform you that SK:N and The Harley Medical Group, as of 17 July, have ceased trading. As a result, we will no longer be undertaking service from this site with immediate effect. Further details will be made available on www.sknclinics.co.uk in due course. We will be contacting all clients still awaiting test results as soon as possible.’
The website message also added: ‘We recognise this outcome will have a significant impact on our team members and our customers and we are deeply sorry for the stress and inconvenience this has caused. We are doing all we can to address the concerns of those affected and will be contacting all clients still awaiting test results as soon as possible. All further updates will be provided on this website when available.’
Angry clients flood social media
Angry customers immediately flooded social media with tales of appointments cancelled at short notice without refunds, while dozens of distressed staff similarly claimed they’d lost their jobs without warning and not been paid.
Sarah Kiely, 40, from Northampton told the BBC she had paid £1,300 for 16 treatments at a SK:N clinic but only had four of them. She arrived at her local clinic on the morning of July 17 to find it shut with a group of women outside trying to find out what was going on; one of them revealed she was owed £15,000 by the company.
Sarah told the BBC she felt ‘really sad’ for the staff at the clinic who, along with hundreds of others across the UK, have lost their jobs overnight.
‘I’ve been using this clinic for three years and have got to know the clinicians and staff personally,’ she explained. ‘For such a huge company to give zero notice to staff or customers is shocking.’
Another customer told bbc.com her appointment had been cancelled ‘out of the blue’ on the morning of July 17 despite having pre-paid £700 for a course of treatments which had not been completed.
She complained: ‘They’ve done this with no prior warning to customers, with no communication about how to get a refund on the treatments customers are owed.’
Jane, 33, from Essex, told the BBC she was ‘extremely stressed’ after having paid £10,870 just six days earlier for abdominal cosmetic surgery and liposuction. ‘They took the full amount on 11 July. It was only one week ago. Surely they would have known they were going to go bust?’ she declared.
Like other patients, when she then phoned her clinic, she simply received an automated message and was left with ‘no idea if she’ll get her money back’.
Jane lamented: ‘I wanted the surgery because I have four children and I wanted my body to be back to how it was before I had children.
‘My dad gave me the money for this and I was going to pay him back in small instalments. My sister had booked time off work to look after my children.’
Confusion over patient refunds
Initially SK:N provided no public comment to say whether refunds will be issued, noted bbc.com.
‘But customers like Jane may struggle to get their money back,’ warned Lisa Webb, a consumer law expert at UK consumer rights organisation ‘Which?’.
‘Unfortunately, when a company ceases trading, customers often end up at the back of a long line of creditors, making it nearly impossible to get a refund,’ she shared.
However, she said there was a light at the end of the tunnel for people who paid for their services on credit as credit card companies were jointly liable for any breach of contract by the retailer.
‘This protection is especially valuable if the retailer has gone out of business,’ she added.
15 minutes to ‘clear out clinics’
Rakhee, 31, who worked at a SK:N clinic in Richmond, told bbc.com that staff were completely ‘shocked’ by the immediate closures.
‘We had 15 minutes to clear out our clinics and go home,’ she said. ‘All our clients were trying to get their money back. Some people were due to get their stitches out.’
Rakhee worked for the SK:N group for nearly a decade, but she and her colleagues were ‘terminated after a 10 minute video call, with no remorse, no empathy, no redundancy pay, not even a final pay slip’.
Lucie, 32, worked at a SK:N clinic in Guildford and had ‘no idea the company was in trouble’ until staff learnt the news at a Zoom meeting.
‘We have been told we’re not going to get paid this month,’ she told the BBC. ‘We had to leave a note on the front door for our clients. They’ve all spent thousands of pounds on procedures and treatments.’
PR firm also ‘blindsided’
SK:N’s communications firm Kendrick (a London-based PR agency) was left similarly shocked by the chain’s sudden closure.
Kendrick simply confirmed on Instagram that SK:N had ceased trading immediately, but ‘at this time we have no information for the press and patients who are understandably reaching out to us wanting clarity on the situation.
‘We have no information regarding how things are being managed by SK:N (or HMRC/debt collection), or how cancelled patient appointments/payments, etc, will be redressed.
‘We are unfortunately in the same position as many staff and patients, with several months of our own invoices being left unpaid with no explanation or redress. We are sorry to have no news to share – this situation has blindsided us all.’
Did SK:N grow too fast?
Dr Aenone Harper-Machin, a spokeswoman for the British Association of Plastic, Reconstructive and Aesthetic Surgeons (Bapras) and a consultant plastic surgeon, told bbc.com that SK:N was an excellent business concept’ which filled a big gap in the market by taking aesthetic treatments mainstream.
But she questioned whether SK:N – which was bought by the private equity company TriSpan in 2019 – had expanded too quickly.
The group had 51 clinics in 2019, but now had over 70 nation-wide clinics under brands including SK:N Clinics, the Harley Medical Group, Skinbrands, The Skin Experts and ABC Medical.
Dr Harper-Machin explained: ‘Laser kit is really, really expensive. Their rent costs would have been, too. I’m not sure, but they probably over-extended themselves.’
Trispan did not immediately comment, but the BBC reported that it ‘understands the owners invested heavily in trying to turn the business around but were unable to manage it’ and ‘now, as customers chase their refunds, around 450 staff face a nervous wait to find out if they will get paid’.
Aesthetics sector ‘has grown rapidly’
SK:N group is part of the UK’s aesthetics sector ‘which has grown rapidly over the last few years by filling a gap in the market for minor aesthetic treatments not covered by the NHS,’ summarised bbc.com.
The Birmingham-headquartered firm started out in 1990 offering laser hair removal, but branched out to provide services ranging from acne treatment and wart removal to lip filler and thread lifts. ‘It’s been a challenging five years for the industry which could not operate during Covid lockdowns,’ the BBC explained. ‘It has also been hit by higher costs and slower consumer spending, due to high inflation.’
Meanwhile, a host of smaller clinics have sprung up ‘to challenge the bigger players’, while health professionals such as dentists ‘are extending their remits to include aesthetic tweakments’, commented Catherine Shuttleworth, founder of the consultancy Retail Savvy.
She said big marketing pushes by aesthetic firms overseas had also had a significant impact on UK clinics.
Why SK:N collapsed
A detailed financial analysis undertaken by business-live.co.uk reported that ‘according to the latest Companies House accounts for Lasercare Clinics Harrogate Limited (trading as SK:N), the business had £35 million of debt that was due to be repaid in full by 2026’.
Public documents for the financial year ending August 31, 2022 – the latest available – show ‘the company made a £7.2 million loss before tax in 2021 and a £4.5 million loss in 2022’.
The analysis noted ‘many of SK:N’s treatments are funded directly by patients’, which the company said left it ‘exposed to economic cycles’.
In addition, the Covid pandemic ‘which hit the beauty industry hard, may well also have played its part in SK:N’s downfall’.
The documents on Companies House stated: ‘Lasercare Clinics Harrogate (Sk:n) is part of the Hebe Topco Group – a non-trading company – and Sk:n’s ability to operate was linked directly to this group’s position. It was also dependent on funding from a holding company called Hebe Bidco to meet its liabilities.’
According to Companies House: ‘Hebe Topco had net liabilities of £62.4 million for the financial year ending August 31, 2022, and made a loss after tax of £16.2 million.’
Auditor Grant Thornton told business-live.co.uk it had not identified any ‘material uncertainties’ that would cast doubt on the company’s ability to continue as a going concern for at least 12 months from when the statements were authorised for issue in September 2023.
Grant Thornton ‘carried out all its legal obligations, but just 10 months on and Lasercare Clinics (Harrogate) is among a number of companies within the group being liquidated’.
Jo Marshall, head of the accounts department at Edge Tax, commented ‘situations like this are unfortunately very common.
“It is a wider issue for the industry. I think testing should be more rigorous, looking at the group as a whole and not relying on directors’ representations.
‘In the end, this group expanded too fast. They were clearly a highly acquisitive company, but the Covid pandemic caused a hit to their cash and then interest rates went up, and they were not generating enough to pay off their interest. They didn’t have any tangible assets and although their performance improved, it wasn’t enough.’
SK:N acquired Lorena Cosmetics
In a surprise August announcement, the SK:N website suddenly revealed that Professor David Moulsdale’s Lorena Cosmetics Holdings had acquired the SK:N group of companies.
The formal announcement stated: ‘Following various media reports in the last couple of weeks, you may be aware that The Harley Medical Group, SK:N Group and ABC Medical ceased trading on 17 July 2024. The immediate closure of over 70 branches across the UK resulted in over 450 colleagues losing their jobs, with many patients left out of pocket or without their treatment being delivered.
‘Many medical consultants also have lost their ability to earn money but, most importantly, patients have been deprived of the critically important services they required or had chosen to undertake. This situation will only increase the already tremendous burden on the NHS over time without our intervention…
‘I am delighted to share the exciting news that Lorena Cosmetics Holdings SPV Limited have completed the acquisition of the following companies:
- The Harley Medical Group
- SK:N otherwise known as SKIN Aesthetics
- Skinbrands
- The Skin experts
- ABC Medical
‘We are working to recruit as many of The Harley Medical Group, SK:N and other Group employees as soon as possible, as we know that they are best placed to serve our existing and new patients.
‘Our human resources and recruitment teams are very focused on this task. I am delighted that many colleagues have already committed to returning. I am confident that many more of you will choose to join us as I know you care very much, as I do, about looking after our patients. Our patients are our number one priority. There is simply no doubt.
‘We understand that many patients will have questions about their treatment plans and about payments they have made for treatment. Obviously, these payments were not paid to us and we do not hold this money.
‘We will do our best to advise patients on the best course of action for them regarding their specific situation. Contact details are listed below for patients who have an immediate enquiry.
‘You will appreciate that this is still a developing situation and while we are working hard to reopen the clinics as quickly as possible, we will do our best to assist patients in any way we can. Please give us more time, be patient with us in the meantime and we will provide further updates as and when we have more information to share.’
MORE CLOSURES AT ELAN CLINICS UK
In February 2024 another UK company, Elan Laser Clinics Ltd, which operated five luxury laser and aesthetic skin treatment clinics across England, ceased trading and called in administrators.
Founded in March 2022, Elan offered a range of skincare, laser hair removal and aesthetic treatments at its clinics located at Portman Square (London), Beaconsfield, Leeds, Liverpool and Hale Barns.
The company ‘incurred significant capital and operating expenses during the set-up phase of the clinics and in developing the brand across the UK’, reported insidermedia.com.
‘Despite growth in the business and brand initially, revenue growth remained below expectation and, in combination with significant operational costs of the business model, caused unmanageable cash flow pressures on the business.’
The business ceased trading immediately ‘with all 35 employees made redundant’.
Administrator Michelle Elliot commented: ‘Elan Laser Clinics had an excellent reputation in the sector and had expanded rapidly since
its inception.
‘Unfortunately, despite this growth, lower than expected revenue was insufficient to cover operational costs and the business required significant funding to allow continued trading. Despite the best efforts of the directors in exploring alternatives, administration was the only option.’
APRIL DRAMA FOR LASER CLINICS UK
SK:N is not the only British aesthetic treatments group to have been hit by an industry downturn: Laser Clinics UK, a chain of 50 franchised salons, also suddenly shut shops earlier this year.
In April thesun.co.uk dramatically headlined: ‘Things have turned ugly for one of Britain’s biggest beauty chains as its clinics are being driven out of business.
‘Laser Clinics UK are facing bankruptcy, with customers likely to lose up to £20 million they have paid for treatments.’
‘The company was hoping to cash in on the craze for anti-ageing Hydrafacials, promoted by celebs such as Beyoncé and Paris Hilton. But some franchisees say their clinics are facing bankruptcy – and will be left on the hook for their business’s debts.’
Several clinics, including Leeds, Leicester and Liverpool, ‘have closed suddenly’ and one franchisee told how ‘she felt suicidal after pumping her life savings of £300,000 into her salon’.
Another was forced to shut the business and was ‘being bombarded with customer complaints’; she summed up: ‘It’s killing me.’
Laser Clinics first opened in Australia in 2008 as a franchise network set up by former actuary Babak Moini and legal IT expert Alistair Champion. It was sold in 2017 to international investment/private equity firm KKR, which expanded its footprint globally, including opening in the UK in 2019 – and by 2024 had more than 200 clinics globally.
KKR ‘was said to have asked UK franchisees to put in an initial £200,000 investment’, reported The Sun. But the owners ‘say they soon found out they had to pay £150,000 for laser machines and had to offer unsustainable discounts and promotions’.
Laser Clinics responded it was taking over a small group of its clinics and emphasised: ‘Our goal – as always – is to support the long-term success of our franchisees.’
At the time of the April 2024 UK crisis, abc.net.au observed: ‘Laser Clinics was a global success story, but like so many before, a franchising scandal could bring it undone.
‘The global brand is battling a PR crisis as some of its UK stores close, attracting the wrath of customers on social media, in newspapers and on TV.’
At that point the Laser Clinics website included a map with more than 100 stores in Australia, 20 in New Zealand, 50 in the UK and seven in Canada. Its Asian clinics ‘have disappeared from the website after the franchise expanded there just a few years ago,’ noted abc.net.au.
An ABC investigation summed up: ‘The bad publicity is spreading like wildfire, with one customer posting on trustpilot.com: ‘One after the other the clinics are closing down. The customers are left with no notice of the closures, the management should refund all customers’ hard-earned money. Media has unveiled the reality so [the] public is not duped’.’
And the BBC consumer program ‘Watchdog on The One Show’ shone a national spotlight on the situation when it interviewed a series of customers who had bought treatments in advance, only to find their clinic had shut down.
The ABC noted it isn’t the first time Laser Clinics has found itself at the centre of controversy. In 2021, the company made headlines in Australia when 52 of its franchised clinics sent the firm a legal letter alleging they were being gouged on costs for equipment and supplies and by an aggressive discounting of treatments.
‘That stoush ended when KKR did a deal with most of the 52 aggrieved clinics to buy them out.’
The ABC summed up: ‘Since then, things have gone downhill for many franchisees, both here and overseas. Covid hit, more competitors entered the industry and, in Australia, a series of regulatory reforms including advertising restrictions made it harder to attract and retain customers.’
But ‘unlike the original founders, who franchisees described as passionate about the business and having treated the franchise as a partnership, franchisees say the very nature of private equity is to buy assets with a view to squeezing as much out of them then flipping them in 3-7 years. They say decisions are made based on numbers and with a short-term horizon.’ AMP
