Shaver Shop’s (ASX: SSG) blades are still sharp

Marc Kennis Marc Kennis, May 28, 2022

Who is Shaver Shop? 

Shaver Shop Group Limited (ASX: SSG) is an Australian and New Zealand specialty retailer of personal grooming products. The company’s core product range comprises male and female hair removal products, such as electric shavers, clippers, trimmers and wet shave items.  


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Shaver Shop also retails various products across the oral care, hair care, massage, air treatment and beauty categories. Shaver Shop Group Limited was founded in 1986 and is based in Chadstone, Australia. 



Shaver Shop Group, Weekly Chart in Semi-log Scale (Source: Metastock)


❶ Despite the COVID-related store closures, Shaver Shop reports strong sales growth driven by growing demand for DIY (Do It Yourself) personal grooming products through the company’s online sales channels.  (SSG – Trading and COVID-19 Update) 

❷ Shaver Shop reports a continuation of strong growth in online sales and upgrades its FY20 guidance. SSG also decides to pay a special dividend due to the strong performance of the business. (SSG – Trading Update, Earnings Guidance and Dividend) 

❸ FY20 results exceed guidance. (SSG – FY20 Results Presentation) 

❹ 1HY21 results exceed guidance. (SSG – H1 FY2021 Results Presentation) 

❺ Shaver Shop mentions the pleasing impact of store re-openings across Australia on its business performance. (SSG – Trading Update) 

❻ Perpetual Limited, a SSG’s substantial shareholder, sells shares on the market and pushes down the share price. (Change in substantial holding from PPT) 


In 2020 and 2021, COVID-related lockdowns and restrictions changed people’s lifestyles, which led to new personal grooming needs and habits. The salon and barbershop closures increased demand for DIY hair removal products, and surging Zoom meetings and people’s social media presence changed the emphasis on appearance.  

Additionally, customers reallocated spending from travel and traditional entertainment venues to online shopping. Shaver Shop was well-positioned to benefit from these changes in lifestyles and spending habits and kept increasing sales and profits through its soaring online sales. The shift from store sales to online sales also improved the company’s profit margins due to the lower costs of online sales and rent abatements from store closures. 


Some of the lifestyle changes tend to last post COVID, some not 

With the salons and barbershops now open, sales of DIY personal grooming products can retrace towards the pre-pandemic levels. However, some of the lifestyle changes that contributed to Shaver Shop‘s increased sales are expected to last beyond COVID. These changes include increasing social media presence, people’s increasing desire to look good every day and more frequent face-to-face meetings as workers return to offices. There are also studies that show men are becoming more like women in terms of their daily beauty and grooming regime. 


Retail sales are expected to grow, but at a slower pace 

With many of the COVID-related restrictions now out of the way, consumers are expected to spend more on services instead of goods. In addition, soaring inflation impacts shoppers’ purchasing power and confidence, which can cause them to pull back on spending.  

On the other hand, unemployment rates are at record lows, wages are growing, and people are flush with cash due to lower spending during the pandemic.   

The resultant of these opposing factors is an expected retail sales growth in 2022 that is lower than in 2021, but higher than the pre-pandemic growth rate. 


Shaver Shop’s valuation reflects a flat EBITDA growth expectation 

Consensus estimates imply almost flat EBITDA growth in FY22 and FY23 and the company’s valuation reflects that with EV/EBITDA multiples of 3.3x and 3.2x for those years. This aligns with our expectations of Shaver Shops’ normalising revenue growth post pandemic and a slowing retail sales growth in the medium term.  

SSG’s price chart also suggests that the market did not expect a continuation of SSG’s profitability growth post pandemic as the share price has spent most of the last 18 months in a range between 95 cents to $1.25, which is not much higher than the pre-pandemic levels of around 70 cents, even though the company’s EPS has almost tripled since then. 

Nevertheless, we believe that even a steady EV/EBITDA ratio of 3.3x for SSG is still attractive as the company has a payout policy of 60-80% and paid 9.5 cents in dividends in the last twelve months, which gives it a dividend yield of 9% at the current share price of $1.05 per share. 


How to play SSG…for yield junkies 

95 cents has acted as a reliable support level as it has reversed the price on several occasions in the last 18 months (the blue line on the chart). In the current bear market, we expect the share price to retrace to this level again in the near future where it can offer a great value for investors who are interested in high dividend yield stocks. We believe SSG can move towards the top of the range at $1.25 in the longer run (the green line on the chart). 


Stop loss at 95 cents 

From a technical analysis perspective, a confirmed break below the important support level at 95 cents would open up the way down to lower prices as many stop-loss orders will likely be triggered. 


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