Shaver Shop aims to push up profit margins by the launch of new hair styling brand ‘Flair’ in 2QFY19

ASX listed grooming products retailer Shaver Shop has been trying to gain traction in female category product line. In order to provide thrust to its profit margins, Shaver Shop is moving ahead with the introduction of private label products under its new hair styling brand ‘Flair’.

It has been revealed that the specialty retailer is underway to launch a new line of hair straighteners, hair dryers, and other hair styling products under its private label brand-Flair by the second quarter of FY19. The strategy is to expand the product line of company owned brand as its yields better profit margins compared to renowned branded products. It seems to be in line with the strategy adopted by other supermarket owners like Coles and Woolworths.

Shaver (ASX: SSG)Shop’s Chief Financial Officer Larry Hamson stated that the company is concerned for having a right number of well-known brands including Braun, Remington, WAHL, dyson, Philips, Gillette and VS Sassoon on its shelves but the expansion of private label products would help the company to achieve great profit margins. It has been understood that over time the company aims to increase its private label sales from 2% of total sales to the range of 5% to 10%. 

Flair is going to be the third private label brand to be launched by the company, following skin rejuvenation brand ‘LumiSkin’ which became operational in March and the ‘Shaver Guard’ range of cleaning and lubricants products. In the recently announced FY18 results, the company confirmed the introduction of new hair styling brand ‘Flair. It is scheduled to be launched in the quarter ending December 2018 to capture the festive season momentum ahead of Christmas. The focus is built upon the products targeted at female customers as the contribution of Female products range to total sales is considerable low compared to males grooming and unisex products.

Meanwhile, the retailer which has about 115 Shaver Shop stores across Australia and New Zealand, plans to ramp up the outlet network by eight to ten in fiscal year 2019.  In the recently announced fully year result for FY18, the company posted rise in total sale by 8.7% to $154.9 million backed by online sales growth of 47.4% along with significant improvement in like-for-like corporate store sales for the fiscal year ended 30 June 2018. But EBITDA has recorded double-digit percentage decline to yield $12.2 million and net profit after tax fell by 27% to 6.6 million which includes one-off cost incurred during the year.

Shaver Shop’s share price has shown no movement today on ASX. The stock is trading at $0.430 on 24 September 2018. Amid facing intense competition in grooming product market, the company’s stock has seen a performance change of -28.33% over the past one year; while the stock is currently trading at PE of 8.110 x with market capitalization of $53.75 million.

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