Cellular Goods (LON: CBX) shares are up 166% in London this morning on the back of news about a distribution deal with Sephora. 166% might be seen as a little too much if we're frank about it for this isn't, really and not quite, a distribution deal. It's an allowance to be listed on the online marketplace. It's, perhaps, more like shouting that you've been allowed to list your goods on Amazon. In that second case the correct answer is, well, that's nice, now let's see the sales numbers. Now yes, there's a certain unfairness in that comparison for Sephora is both more exclusive as an online platform and also probably the right place for Cellular's products to be listed. And yet a near doubling could be seen as an over reaction.
On the other hand Cellular is a very small company, total market valuation in the £couple of million range. So, even if the deal is less than stunningly successful it could well have an impact upon revenues and profits.
Cellular Goods share price from London Stock Exchange
On the one side Sephora is a very successful retailer of goods to the young and fashionistas. So, given that Cellular makes “skincare and wellness …premium consumer products formulated with lab-produced cannabinoids” and also that anything with cannabinoids is right and proper trendy at present then that could be a very good deal.
So note what the actual deal is though: “a contract with multinational beauty and cosmetics retailer Sephora to make the Company's 'Look Better' (skincare) range available for purchase on Sephora's e-commerce website, Sephora.co.uk from the second half of May.” Folk will be able to buy Cellular products through Sephora's website if they should wish to do so. There's still that marketing of the items to be done that is. Sephora here is a sales channel, not a buyer nor even, really, a stockist.
Quite what the effect will be is therefore unknown. There is a simple enough test though. Find a random teenage girl of acquaintance, present them with this news of cannabidiol products about to be available on Sephora and see what the reaction is. Invest on that basis. Or not, of course.
