Sanctuary reveals plan to expand outside London

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The Independent Online

Sanctuary, the London-based spa that sells products in Boots stores, is testing mini-high street versions as part of its plans to double in size to a £50m business over the next two years.

The company, which is run by the former Marks & Spencer marketing director Alice Avis, is launching a new range of premium products later this month as part of an expansion drive that will see the women-only day spa expand outside London.

It is in talks over the site of a second spa - its first is in Covent Garden - and will open the first of its new concept mini spas later this year in the capital. If the format, which will focus on skin care treatments, proves popular it will be rolled out across the UK.

In December, Sanctuary's sales surged by 27 per cent to £11m, making it one of Boots' best-selling lines. Ms Avis said there was scope to increase distribution into the 1,500 smaller community stores that Boots acquired when it merged with Alliance Unichem as the two groups' integration process proceeded. "We'd be a natural fit for those stores because we're so strong on Christmas gift products," Ms Avis said.

Sanctuary also plans to expand further in the US beyond its limited relationship with Target, the retail giant. It has been approached by a number of other US retailers. It is also hoping to grow its sales in Asia, where it already distributes through a number of Boots stores.

The company will invest about £3.5m each year to hit its target of increasing annual sales from £33m to £50m by 2009. It does not plan to seek extra financing from Hg Capital, its private equity owner that spent £23m buying back the licence to manufacture its own-brand products two years ago.

Ms Avis predicted that Hg would not seek to sell its controlling stake "as long as the products business is growing by 15 to 20 per cent a year". She added: "It is not considering an exit."

Within a decade, Sanctuary, which was set up in 1977, expects to own 10 day spas in each of the UK's top towns. Its Covent Garden site is already operating at capacity at around 64,000 visitors per year. Competition in the spa business has intensified. Champneys, the luxury health club, is opening new outlets and stretching its brand into a range of new products. Bliss, the US brand, is also expanding.

One potential expansion route that Ms Avis has ruled out is a tie-up with one of the country's major health club chains after an unsuccessful relationship with the David Lloyd Leisure chain. She also said the women-only policy would continue.

Ms Avis, who joined the board of Sanctuary in 2001, became chief executive in 2005. She left M&S with a £250,000 payout after Stuart Rose arrived and installed his own marketing director, Steve Sharp, over her head. She said the brand's exclusive UK distribution deal with Boots would continue for at least the next two years.