Shaver Shop IPO

The business has a strong competitive position within the Personal Care appliances market with 25% market share. Shaver Shop stocks all major brands in the Hair Removal segment including Philips, Remington, Braun and Wahl. Significantly, Shaver Shop accounts for a large proportion of these brands’ sales in Australia and is therefore critical to suppliers’ distribution strategies in the region. This is demonstrated by the fact that Shaver Shop has access to exclusive product, further cementing their competitive advantage.

Under current management Shaver Shop has recorded impressive earnings growth over the last four years, driven by franchise store buybacks, new store openings and positive like-for-like (LFL) sales growth. As testament to the success of Shaver Shop’s retail model, LFL sales growth has averaged 7.5% p.a. and sales per square metre is $21,000, around twice the average of other specialty retailers. We believe that the FY17 prospectus forecasts are conservative given they assume 2.5% LFL growth and modest store rollout.

Shaver Shop will have minimal debt at listing which provides capacity to facilitate continued growth in the store network. Management have identified an additional 45 potential sites for Shaver Shop stores. Further, we expect Shaver Shop to continue their strategy of buying back franchise stores. In recent years management have been able to generate attractive returns on capital of around 30% when buying back franchise stores and opening new stores.

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