Shaver Shop (ASX:SSG) share price dives 8% after FY21 trading update

The company’s shares have been caught in a harsh sell-off.

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Shaver Shop Group Ltd (ASX: SSG) shares dived by nearly 14% in early morning trade today. They have since rallied back to $1 at the time of writing, down 8.26% from yesterday’s close.

It appears the Shaver Shop share price is reacting to the company’s FY21 outlook announcement released this morning. Here’s what the company expects to deliver by 30 June 2021.

Outlook

Shaver Shop shares are in the red after the company advised it expects to deliver total sales of between $211 million and $213 million in FY21. This represents an 8.2% to 9.3% increase against FY20 sales of $194.9 million.

Worth noting is the company’s accelerated growth during COVID-19. Shaver Shop’s FY20 total sales increased 16.4% compared to the prior corresponding period.

Additionally, the company expects FY21 net profit after tax to be within the range of $16.75 million to $17.5 million. The forecast net profit figures represent a 58% to 65% increase compared to FY20 net profit of $10.6 million.

There has been a recent trend of ASX retail shares cycling through a tough period of comparables, during which COVID-19 arguably supercharged sales. And judging by today’s Shaver Shop share price performance, the fact the company’s sales growth has slowed may be disappointing some investors.

Another factor that may be concerning some investors is the company’s cash position. Shaver Shop advised it expects to hold $6 million to $8 million in net cash with no debt by the end of 30 June 2021.

This represents a significant decline from the company’s half-year results, in which Shaver Shop reported $41.1 million in cash with no debt.

Shaver Shop shares slide into negative YTD territory

The Shaver Shop share price started the year off strong. A positive trading update lifted its year-to-date returns to about 18% on 11 January.

However, since February, the company’s shares have struggled to trend higher, stalling around the $1.00 to $1.10 level.

Despite the S&P/ASX 200 Index (ASX: XJO) lifting 10% year to date, today’s harsh sell-off has sent the Shaver Shop share price in the opposite direction. Prior to today, the company’s shares were around 3% higher for the year and are now trading 5.7% lower in 2021.

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Kerry Sun has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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