Shaver Shop shares lift as it trims guidance range on sales strength

Shaver Shop shares are up after it trimmed its guidance range on the back of strong sales growth.

The Shaver Shop CEO Cameron Fox in a Shaver Shop outlet in Melbourne. Picture:Ian Currie

Specialty grooming retailer Shaver Shop has defied the domestic retail slump and raised the lower end of its earnings guidance on the back of improved same store sales growth for the second-half of the financial year so far.

Strength in the retailer’s (SSG) underlying performance to date prompted Shaver Shop to narrow its normalised earnings before interest, tax, depreciation and amortisation guidance for the full year to be within the range of $12.5 million and $14m, compared to between $12m and $14.5m previously.

That compared to an EBITDA of $13.2m for the 2018 fiscal year.

Shares in Shaver Shop jumped on the news, closing up 3.8 per cent at 42 cents apiece. The company debuted on the ASX in 2016 at $1.05 a share.

The upgrade came as official data revealed this morning that Australian retail sales were stronger than expected in March, rising 0.3 per cent, but sales had fallen 0.1 per cent across the first quarter.

In a statement to the ASX this morning, Shaver Shop said same store sales growth had been 8.7 per cent for the four months through April, up 0.8 per cent on the same period a year ago.

Chief executive Cameron Fox put the increased sales in recent months down to a customer focus.

“We have a lot of focus on staff training and I think that’s probably the key, actual conversion numbers have increased in the last six months so it’s not so much that we are getting more people coming through the doors,” he told The Australian.

“It’s really doing more with the existing customers rather than increasing foot traffic.”

Australia’s personal care market was continuing to grow, particularly with men, whose beauty regime was becoming increasingly similar to women’s, Shaver Shop said.

Men were increasingly using multiple tools, and skincare products were becoming increasingly relevant for millennial men as well as the over 40s.

“The increase in sales for grooming kits have been going on for some time and I think it just follows the trends,” Mr Fox said.

“It doesn’t matter what look you are going for whether it’s three-day growth; the goatee or the full beard, you actually need a different personal care tool for whichever one you are going for.

“We’re benefiting from that because there has been a lot of innovation in that space and customers are wanting products that do the job quickly, conveniently and with no irritation.”

The profit update came despite a challenging Christmas period for many retailers, particularly in the fashion and apparel space, with Kmart, PAS Group, Kathmandu and David Jones revealing sales slumps or profit warnings.

In March, analysts at Deloitte predicted further pain for the retail sector in 2019 before a recovery next year, as household budgets remained strained due to the housing downturn and slow wage growth.

Still, Shaver Shop said its new store layouts were helping to drive same store sales growth, while investment in omni retail capability had driven online sales higher.

“Our ongoing omni retail initiatives are delivering solid online sales growth so far this half,” Mr Fox said.

“This is before we launch our customer relationship management platform in the coming months which will significantly enhance our ability to engage with customers on a more personalised and timely basis across any retail channel.”

The company said it had undertaken five full store refits and one store relocation to improve “shopabilty” and increase customer engagement through “touch and feel” display units. More refits and relocations were in the pipeline for the next two years, Shaver Shop said.

Shaver Shop was also in the process of buying back franchised stores, which the retailer said was another growth opportunity, with earnings before interest, tax, depreciation and amortisation in the franchise group expected to be around $2.5m while a significant tax benefit from the buybacks would be realised in the coming years.

About $1.6m of that would be realised at the full year, the company said.

In February, Shaver Shop delivered a normalised net profit after tax of $6.76m for the first half, down from $7.2m the prior period.