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Tattoo removal firm aims for IPO as black ink flows

MEDICAL SERVICES

Dr. Tattoff, which has three Southern California locations, says it's seeing record high volume and revenue. An investment expert says the company should get bigger before issuing stock to the public.

August 06, 2009|Nathan Olivarez-Giles

After a decade, adult-film star Alexis Amore is looking to remove the Playboy bunny tattoo below her belly button. She also wants to get rid of a crown and the letter "a" on her wrists.

"I got them when I was really young," said the petite 30-year-old. "I'm a little bit older and a little bit wiser now. And it's not very classy to have tattoos on your wrists and stomach."

Amore, who goes by her stage name, is in the months-long process of getting rid of her ink at the Dr. Tattoff tattoo removal clinic in Beverly Hills.

The actress is just one of the dozens of people who walk through Dr. Tattoff's doors each day.

As more and more people offer up their arms, chests and ankles for tattoos of all kinds, the market for getting rid of them is growing. And Dr. Tattoff Inc. is hoping to cash in on those regrets.

The company, which also has tattoo-removal clinics in Encino and Irvine, uses lasers to burn away the ink. Its three locations get about 25 customers a day each, said John Keefe, Dr. Tattoff's chief executive. By year-end the firm hopes to have an additional five locations outside California, and it wants to start issuing publicly traded stock next year.

"Tattoos are becoming more common in the workplace and in society," Keefe said. "My suspicion is that along with that, the tattoo regret factor will only grow as people get older."

Keefe declined to release the firm's revenue total but did say Tattoff is a multimillion-dollar business. He estimated that tattoo removal could become a $10-billion-a-year industry. And this is catching the eye of investors and firms that would like to help Dr. Tattoff expand.

Tattoos are big business, and it costs more to remove a tattoo than to get one.

Most tattoos run about $100, depending on the size of the piece, the colors used and the skill of the tattooer. It usually costs about $750 to $1,500 to remove one, Keefe said, because it requires five to 10 treatments at about $150 a pop.

But whereas a dozen or so tattoo parlors can be found in most big cities, tattoo removal clinics are much harder to find -- which means huge potential for Dr. Tattoff, said Steve Kann, managing director at Bridgewater Capital Corp., an Irvine investment bank.

Kann does no business with Dr. Tattoff but has taken a look at its business plan. "The numbers they're generating on their three locations are really impressive numbers, top line and bottom line," he said. "I think you could have one or two or three locations in every major metropolitan area in the country and you're going to do substantial business with every location."

But before going public, Dr. Tattoff has some work to do, he said.

"They should get bigger, they should get more locations and they should do more revenue," Kann said. "Laser tattoo removal has been out there and available for a while, but nobody has really gone out there and branded it with any sort of franchises or chain."

As the market for stock issued by companies new to public trading has dwindled during the recession, Dr. Tattoff's business hasn't, which is a surprise for both Kann and the company's principal owner and dermatologist, Dr. Will Kirby.

"You would think people wouldn't use their discretionary income to spend on tattoo removal, but our volume and revenue are at an all-time high right now," Kirby said.

A Harris online poll of 2,302 U.S. residents last year showed 14% of the respondents -- mostly people between 21 and 39 -- have tattoos, and 1 in 5 of those living in the West had one.

Among those with tattoos, 84% had no regrets. Among the remorseful, the main reasons cited were because they were too young when they got the tattoo, because it is permanent and they are marked for life, because they don't like it and because tattoos fade over time.

Kirby figures that opening five more Dr. Tattoff clinics by year's end, an admittedly ambitious plan, would help lay the footing for a successful stock offering next year that could provide more cash for growth.

The company was supposed to issue an initial public stock offering last fall but held back on the move as the recession hit. "I'm hoping the economy recovers quickly," Kirby said. "We just need the market for IPOs to come around."

Dr. Tattoff isn't the only company waiting for the right time to issue publicly traded stock. As many as a dozen California firms are watching for the right time to go public -- which may be coming soon, said Jackie Kelley, an IPO analyst for consulting firm Ernst and Young.

So far this year, 15 IPOs have been issued, seven in June, Kelley said. Only two of the 15 companies to have gone public this year are trading below their first-day stock price, she said.

"The investors seem to be there if the deals are right," Kelley said. "Investors looking to invest today aren't going to take the same level of risk they were a couple years ago."

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