If you’ve noticed repeated advertising for the Skull Shaver during sports broadcasts, you’ll now have to buy them from grooming and beauty retailer Shaver Shop Group (ASX: SSG) which has secured the popular product’s exclusive distribution rights in Australia and New Zealand.
Skull Shaver, renowned for its innovative head-shaving products, has been a significant supplier to Shaver Shop for approximately five years. Since its launch with Shaver Shop in 2019, Skull Shaver has shown remarkable sales growth, establishing itself as a leading brand in the market. The brand’s success is attributed to its high-performing products, exceptional design, and innovative marketing strategies, including the notable Skull Shaver 2023 Super Bowl advertisement.
Highlighting the demand for Skull Shaver products amongst Australian men, they have dominated Shaver Shop’s FY24 sales, with the top three selling hair clipper products belonging to the brand.
Key aspects of the 5-year exclusive distribution agreement include an up-front fee of US$2.25 million paid by Shaver Shop at commencement, followed by a further fee of US$2.5 million upon renewal after five years and covers all online and retail channels.
In return, Skull Shaver will significantly reduce Shaver Shop’s current Skull Shaver cost of goods, providing an opportunity for increased gross margin.
Shaver Shop anticipates that the arrangement will be earnings accretive in the first full year, with a payback period of approximately three years. The up-front exclusivity fee will be covered using available cash-on-hand.
“We are thrilled to have locked in an exclusive licence with Skull Shaver which reflects the strength of our partnership, our valued role as a market leader in Australia, and our commitment to working in partnership with the world’s best brands in our key product categories,” said Shaver Shop Managing Director, Cameron Fox.
“This agreement creates long-term alignment between our organisations to continue to drive growth in our market,” said Fox.
Fox highlighted that securing exclusivity with leading brands that deliver product and marketing innovation in core product categories has been a strategic focus of Shaver Shop which operates 123 retail stores throughout Australia and New Zealand, complemented by its online store.
Skull Shaver’s product range is expanding beyond head shavers to include men’s beard trimmers, shaving brushes, and lady shavers. Shaver Shop also reports strong sales growth in Skull Shaver consumable products, such as replacement shaver heads, which are recommended to be replaced every three to six months.
For the Half Year ended 31 December 2023, Shaver Shop reported $127 million in total sales which was a 3.7% decline on the previous corresponding period, common across the retail industry being smashed by reduced consumer spending from macroeconomic headwinds.
Withstanding this, the Company still delivered $12.5 million in net profit after tax (down 8.6%) where shareholders were issued a fully-franked interim dividend of $0.047 per share.
Alfred Chan is a Business Reporter at The Sentiment specialising in ASX-listed small cap companies, bloodstock enthusiast and former Analyst.
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