It may not have been a great start to the day for the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO), but it has been a very different story for shares of Shaver Shop Group Ltd (ASX: SSG).
The shares of the personal grooming products retailer surged higher by over 4% to 72 cents in morning trade following the release of a sales update.
According to the release Shaver Shop's sales in December from its corporate stores came in at $27.8 million, which was at the higher end of its previous guidance range of between $26 million and $28 million.
Half-year sales for the period ending December 31 2016 were $78.5 million compared to $62.2 million in the prior corresponding period.
Although a 26% jump in sales is great to see, unfortunately like for like sales growth disappointed. During the half Shaver Shop reported a 0.5% decline in like for like sales.
Like for like sales growth is the key figure I look for when evaluating the performance of retail shares. Essentially it shows how a retailer's sales would have grown had they not opened new stores. A decline in like for likes sales is a bit of a warning sign in my eyes.
Management blamed the poor like for like sales performance on lower sales of its hair styling products over the Christmas period.
One thing that I feel is worth remembering is that although the retailer did hit the higher end of its guidance, that particular guidance was actually a downgrade provided to the market on the last trading day before the Christmas break. Previously management had expected sales of $29.5 million during the month.
I'm not entirely confident that the second-half performance will be any better than the first. So for this reason I would suggest investors avoid Shaver Shop, at least until it provides an update on second-half trading.
Until then retailers such as Premier Investments Limited (ASX: PMV) and Baby Bunting Group Ltd (ASX: BBN) could be far better options for investors.
