The Shaver Shop Group Ltd (ASX: SSG) share price surged as much as 27.8% higher in early trade today after the market reacted positively to the retailer's 1H20 results.
At the time of writing, Shaver Shop shares are trading 18% higher at $0.785 per share.
Online sales drive strong revenue growth
Shaver Shop reported overall revenue for the half-year to be up by 12.3% to $107.5 million, while like-for-like (LFL) sales were up 9.3%.
Online sales were where the most significant jump in revenues occurred, up by a massive 61%. The contribution of online sales has grown significantly as a proportion of overall sales and now represents a hefty 17.5% of total network sales. Additionally, LFL growth was noted to have been achieved in brick and mortar stores.
Although Shaver Shop's gross profit margin was reported to be down 100 basis points to 41.7%, net profit after tax increased quite strongly by 16.3% to $7.9 million. Meanwhile, earnings before interest, tax, depreciation and amortisation (EBITDA) also saw a 16.8% rise to reach $12.9 million.
The company reported a 33% increase in operating cash flow to $23.7 million during the period, demonstrating strong cash conversion. This contributed to Shaver Shop ending the half-year period with a strong balance sheet. Net cash on the books at 31 December 2019 stood at $8.4 million, quite the turnaround from the company's net debt position of $6.4 million at 30 June 2019.
Earnings per share came in 16.3% higher to 6.5 cents, while an interim dividend of 2.1 cents per share was declared. This interim dividend represents a 5% uplift from 1H19 and is 80% franked.
During the half-year, Shaver Shop continued its full store refit program with seven stores undergoing a refresh. Three additional stores were said to be due to undergo full store refits in the second half of FY20, bringing the total number of stores undergoing a full refit to 16.
Shaver Shop's New Zealand operation also experienced strong growth LFL store sales up almost 24% in the half-year. According to the company, this was underpinned by both strong online and brick and mortar growth.
Management commentary
Commenting on Shaver Shop's 1H20 results, Managing Director and CEO, Cameron Fox said:
"We are very pleased with our first half results with Shaver Shop delivering record sales and earnings. Like for like sales growth of 9.3% reflected an exceptional performance from our online business as well as growth in our bricks and mortar stores."
"Around 18 months ago, we highlighted the need to increase investment in Shaver Shop's omni channel capabilities to ensure our customers experienced similar service levels online as they do in store. These investments started delivering returns in January 2019 and I am pleased to report that we are on-track to report our 14th consecutive month of like for like sales growth," he added.
Outlook for the remainder of FY20
Shaver Shop commented that it expects LFL sales growth to moderate slightly in the second half of FY20. However, the company is on track to deliver a record result for the full year FY20.
Shaver shop will continue to invest in its omni retail marketing program, driven by its online offering. The company expects this will lead to higher overall marketing expenses in 2H20, however, this will position it for continued growth in FY21.
The company anticipates FY20 comparable EBITDA to be in the range of $14.25 million to $15.75 million. However, if further commented that earnings guidance assumes no material impact in the second half from the coronavirus.
