Release Date: August 26, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Shaver Shop Group Ltd (ASX:SSG, Financial) has a strong balance sheet with net cash and no debt.
- The company has a high brand awareness in Australia, with unprompted brand awareness around 87%.
- Shaver Shop Group Ltd (ASX:SSG) has secured exclusive distribution rights for several high-demand brands like Skull Shaver, Epilady, Silk'n, and Oclean.
- The company continues to generate strong operating cash flow, which was $34.1 million in FY24.
- Shaver Shop Group Ltd (ASX:SSG) maintains a high Net Promoter Score (NPS) of 89, indicating strong customer satisfaction.
Negative Points
- Sales declined by 2.3% in FY24 to $219 million.
- Net profit decreased by 10.1% to $15.1 million.
- Customer foot traffic declined by 13%, impacting in-store sales.
- Operating expenses increased slightly, with the cost of doing business rising by 0.7%.
- The company faces challenges from high interest rates and cost of living pressures, affecting consumer spending.
Q & A Highlights
Q: Can you elaborate on the new products and the focus shift towards category expansion?
A: Cameron Fox, CEO: It's a combination of both new brands and category creep opportunities. We're expanding into men's hairstyling, women's shampoo and conditioner, and fragrances to increase basket size through these ancillary opportunities.
Q: Are there any M&A opportunities you're currently exploring?
A: Cameron Fox, CEO: We're always open to M&A opportunities, but our focus remains on our core business. Lawrence Hamson, CFO: We've looked at a few things in the last 6-12 months but nothing has matched what we think is the right fit for Shaver Shop.
Q: What are the costs associated with the Transform U private label range?
A: Lawrence Hamson, CFO: The primary cost is the stock investment, with some incremental costs for brand development. Most products are sourced from China, with some from Europe, but the overall financial impact is not material.
Q: Can you provide more details on the foot traffic trends over the past year?
A: Cameron Fox, CEO: Outside passing traffic in shopping centers declined by double digits, but in-store traffic was less pronounced. Our focus on customer conversion and staff training has helped mitigate the impact of declining foot traffic.
Q: How long have you been developing the new private label products, and where are they sourced from?
A: Cameron Fox, CEO: We've been working on this for about 12 months, ensuring the products meet quality and commercial standards. Lawrence Hamson, CFO: Most products are sourced from China, with some from Europe. No costs have been capitalized; all expenses were incurred in FY24.
Q: Will the inventory-to-sales ratio increase permanently due to the new private label range?
A: Lawrence Hamson, CFO: Inventory levels will fluctuate throughout the year. We expect the year-end inventory to be around $27-28 million, considering the Transform U brand launch and optimal stock levels.
Q: What are your thoughts on capital returns if no suitable M&A opportunities arise?
A: Lawrence Hamson, CFO: As long as we see opportunities to drive accretion into the business, like the Skull Shaver deal, we prefer to keep cash on the balance sheet. The Board will consider capital management if circumstances change.
Q: Can you provide more color on the quarterly sales growth despite declining foot traffic?
A: Cameron Fox, CEO: Our strong brand awareness and focus on customer conversion have helped us achieve impressive sales growth. Our teams are well-trained to maximize sales conversion, basket size, and average transaction value.
Q: What are the key priorities for FY25?
A: Cameron Fox, CEO: We aim to be category leaders with innovative brands and products, maximize opportunities from the Skull Shaver exclusivity, and evolve our store design to enhance the shopping experience. We also plan to launch new brands and our private label, Transform U.
Q: How do you plan to manage the impact of tight consumer budgets?
A: Cameron Fox, CEO: We will focus on key gift-giving periods like Father's Day, Black Friday, and Christmas. Our promotional programs are already locked in with suppliers, and we will ensure our store teams are fully trained and engaged to maximize performance.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
