Release Date: February 26, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Gross profit margin increased by 10 basis points to 44.4%, indicating effective cost management.
- Net cash position is strong at $31.9 million, supported by operating cash flow of $34.9 million.
- Declared a $0.047 per share interim dividend, fully franked, maintaining a stable payout ratio.
- Online sales remained steady at $31.1 million, representing 23-25% of total sales.
- Sales conversion rate in stores remains high at 44.8%, despite a slight decline from the previous year.
Negative Points
- First half sales declined by 3.7% to $127.0 million due to a more price-conscious consumer base.
- Net profit after tax decreased by 8.6% to $12.5 million compared to the previous year.
- Foot traffic in stores was down around 13% compared to the first half of 2023, significantly lower than pre-COVID levels.
- Cost of doing business increased to 23.9% of sales, up 90 basis points from the prior period.
- Employment costs rose by 5.8% due to mandated wage increases, adding pressure to operating expenses.
Q & A Highlights
Shaver Shop Group Ltd (ASX:SSG, Financial) Earnings Call Highlights
Q: Has there been any significant change in the percentage of exclusive products that you're selling as a result of the shift in product mix?
A: Cameron Fox, CEO: No, there's been no material change in the percentage of sales from exclusive product lines. The revenue derived from those exclusive product lines remains consistent.
Q: Can you provide more details about the store software that you're rolling out?
A: Lawrence Hamson, CFO: The new software touches both customer-facing and internal operations. It integrates with our financial systems, and we are working to get it up as soon as possible.
Q: How is your social media presence and its ability to drive sales tracking now?
A: Cameron Fox, CEO: We've significantly developed our social media platforms over the last 12 months, leveraging product knowledge from our store teams. This has helped drive organic growth through search, but we are still about 50% through our roadmap for social media.
Q: Can you give more details about your capital management options?
A: Lawrence Hamson, CFO: The Board is considering various capital management alternatives. We aim to maintain a strong balance sheet and liquidity to pursue accretive growth opportunities. If such opportunities do not arise, other capital management options will be considered.
Q: Can you comment on the foot traffic observations or data you've seen in the second half of FY24 so far?
A: Lawrence Hamson, CFO: Foot traffic remains consistent with the second quarter, still well down on the prior comparative period. However, our ability to attract customers into our stores has improved.
Q: What is the status of your debt facility?
A: Lawrence Hamson, CFO: Our debt facility is $29.5 million, including a $10 million trade finance facility and a $19.5 million term facility. These are up for renewal around July 31, 2024.
Q: How are you balancing top-line demand with gross profit dollar growth?
A: Cameron Fox, CEO: We continue to invest in our store teams and promotional campaigns to ensure customer satisfaction and drive sales. We also focus on exclusive product ranges and new site opportunities to maximize returns.
Q: How has the shift in Christmas shopping patterns affected your operations?
A: Lawrence Hamson, CFO: The shift towards Black Friday promotions has caused us to change our store rostering and promotional strategies. This structural change is expected to continue, impacting how we manage our peak sales periods.
Q: What are your second-half priorities?
A: Cameron Fox, CEO: Our priorities include enhancing customer experience, investing in store teams, balancing demand with gross profit growth, expanding exclusive product ranges, and identifying new site opportunities.
Q: How do you see the retail environment and consumer sentiment evolving?
A: Cameron Fox, CEO: While the retail environment remains challenging, we are well-positioned to benefit from the growing acceptance of DIY personal grooming. We aim to end the year strongly and return to growth as consumer sentiment improves.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
