The Shriro Holdings Ltd (ASX: SHM) share price is up today after the company reported a 14% sales growth compared to the previous corresponding period. This was driven by the strong demand for household related goods including appliances, BBQs and musical instruments.
The Shriro share price is up by 13.7% in year to date trading despite falling about 44% during COVID-19 lockdowns.
At the time of writing, the Shriro share price was trading up 3.85% at 8.1 cents after an early high of 8.3 cents. Let's take a look at today's update.
What's behind the Shriro share price momentum?
The company distributes and manufactures home appliances, and distributes consumer electronics, in Australia and New Zealand. Today's announcement builds on the good news in the company's half year report to June.
During this period, sales revenue dropped by 1.8% but the company was able to increase net profit after tax by 74%. This was due to Shriro's cost control measures during the lockdown. These included rationalising office premises which started last year, postponing planned marketing expenditure and reducing staff working hours by 40%. In addition, there were full and partial stand‐downs of certain roles, and an agreement to reduce director and management pay by 20% and 40% respectively for April to May.
Casio calculators, keyboards and appliances for the residential renovation market performed well while watches underperformed through the period of retail closures and reduced consumer confidence. Watches have since recovered from May 2020.
The seasonal products division which includes heating, cooling and BBQs performed in line with the prior year. Although heater sales did not reach their full potential due to COVID‐19 related supply disruption. The Omega Appliances brand and product refresh occurred in the half and were successful in gaining increased in‐store brand presence. Greater investment in digital and ecommerce assets supports the brand refresh.
What did management say?
Shriro's key trading period is in the months leading up to Christmas. Sales will undoubtedly be impacted by unannounced government directives. However, despite the economic uncertainty, the company expects sales to remain resilient. Thus allowing continued focus on building brands that succeed into the future.
CEO Tim Hargreaves said:
We remain cautiously optimistic that Shriro is positioned for continued growth in Q4. However given the unpredictability of the economic climate and ongoing consumer-related effects stemming from COVID‐19, nothing can be certain.
