The Shaver Shop Group Ltd (ASX: SSG) share price is up 11% after giving a business update.
As the name may suggest, Shaver Shop is a retailer of male and female grooming products. It aims to be the market leader in all things related to hair removal. It now has over 120 Shaver Shop outlets.
Profit update
Shaver Shop said that its strong trading performance continued through December, leading to FY21 second quarter sales increasing by 12.4% in total and 13.7% on a like for like basis.
Online sales grew by 64.7% in the second quarter of FY21, which was the primary driver of total and like for like sales growth.
Looking at the overall first half of FY21, online sales went up 102% which helped like for like sales rises by 17.3% and total sales went up 15.2%. Online sales represented around 30% of total sales in the first half.
Profit margins
Shaver Shop said that the gross profit margin is expected to increase more than 200 basis points across the first half of FY21 because the company decided to balance volume growth and profit margins, particularly across the key Black Friday, Christmas and Boxing Day trading periods.
Management comments
Shaver Shop CEO Mr Cameron Fox said: “I am exceptionally proud of our first half performance. Shaver Shop has now delivered 24 months of consecutive like for like sales growth, underpinned by the accelerating trends towards DIY personal care solutions. Our customer database now exceeds 600,000 members”.
“With in-store sales conversion of more than 50% and average transaction values increasing more than 10%, our store teams were able to more than offset the 20% plus decline in outside foot traffic we saw in December. We expect our first half profit to increase 75% to 85%.”
Profit guidance
Shaver Shop’s net profit is expected to be in a range of $13.5 million to $14 million for the first half of FY21, representing the growth of 75% to 85% that the CEO just referred to.
Summary thoughts
Shaver Shop is clearly doing well in these strange times. I’m unsure of whether the retail boom at the moment is just a one-off or whether it can be continued beyond February 2021 (when it will be cycling comparative periods including COVID-19 and the government stimulus). How much growth can Shaver Shop deliver over the long term? I don’t have an answer, so I’m happy just to be an observer.
I do like some retail ASX growth shares like City Chic Collective Ltd (ASX: CCX) that has international growth aspirations and Premier Investments Limited (ASX: PMV).
