The Shaver Shop Group Ltd (ASX: SSG) share price is on watch after the company provided a business update and announced the buyback of its final six franchise stores.
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What could impact the Shaver Shop share price today?
It will be interesting to see what the Shaver Shop share price does today after the company advised it has entered into a definitive agreement to acquire its six remaining franchise stores in New South Wales for $13 million plus stock on hand. The transaction is expected to complete on 1 February 2021.
Shaver Shop's Managing Director and CEO, Mr Cameron Fox, said:
We are very excited to be acquiring the last six franchised stores and turning Shaver Shop into a fully owned corporate network. These are powerhouse locations across metro-Sydney that have proven to outperform in online sales growth as well as deliver strong in-store sales results. This completes our franchise buyback strategy, simplifies our business processes and reporting, and in doing so will lead to better outcomes for our customers.
The acquisition will be immediately accretive to the company's earnings with approximately $1.5 million to $1.6 million being added to net profit after tax (NPAT) in the first full year of ownership. To add some perspective, the company delivered a 44.6% increase in NPAT of $10.6 million in FY20.
The transaction will be funded with available cash and debt facilities if required. Shaver Shop had approximately $20.6 million net cash with no debt at 30 November 2020.
Business update
The Shaver Shop share price and earnings have benefitted considerably from COVID-19 lockdowns. The business update reveals that sales trends in the first quarter of FY21 have continued through October and November after the easing of government restrictions. Total sales for the five months ended 30 November 2020 were up 19.1% to $88.4 million. This growth was underpinned by a 137% increase in online sales, amounting to a 33.2% of total sales in FY21.
The Shaver Shop share price is up 60% year to date and currently $1.06 at the time of writing. Its shares are only 7% below their 52-week high of $1.16. Shaver Shop's record sales and profits have translated to a FY20 dividend of 4.8 cents per share or a yield of approximately 2.50% at today's prices.
