Increasing Grooming Demand And Digital Growth Will Expand Opportunities

Key Takeaways

• Strong demand for grooming products and private label expansion are driving long-term revenue growth, higher margins, and improved profitability.
  
• Enhanced online channels and optimized store strategy are supporting omni-channel sales growth and greater operational efficiency.
  
• Heavy reliance on core categories, rising fixed costs, shifting consumer behaviors, and intensifying competition threaten margins, growth prospects, and market share retention.

Catalysts

Engages in retailing personal care and grooming products in Australia and New Zealand.

• The increasing consumer focus on personal appearance and wellbeing, particularly among men, alongside changing beauty standards, is driving sustained demand for personal grooming products-Shaver Shop's core segment-supporting long-term sales growth and revenue potential.
  
• An aging population in Australia and New Zealand is likely to lead to recurring, higher-value purchases in personal care and wellness appliances, broadening Shaver Shop's customer base and promoting stability in future revenue streams.
  
• The company's rapid expansion and success of its private label brand, Transform-U, along with an ongoing focus on exclusive distribution agreements (e.g., Skull Shaver, Epilady), is improving product differentiation, increasing gross margins, and positively impacting future net earnings.
  
• Accelerated investment and improvement in Shaver Shop's online and digital channels-including social media, organic traffic growth, and content management-enhances its ability to capture a larger share of the growing e-commerce market, supporting omni-channel revenue growth and improving cost efficiency.
  
• Ongoing store footprint optimization, with selective new openings in high-traffic areas and continual store refits to expand category ranges, is expected to generate higher sales per square metre, increased operational leverage, and expanding EBIT margins over the medium term.

Shaver Shop Group Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Shaver Shop Group's revenue will grow by 4.2% annually over the next 3 years.
• Analysts assume that profit margins will increase from 6.8% today to 7.5% in 3 years time.
• Analysts expect earnings to reach A$18.5 million (and earnings per share of A$0.14) by about August 2028, up from A$14.9 million today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 15.7x on those 2028 earnings, up from 13.8x today. This future PE is lower than the current PE for the AU Specialty Retail industry at 26.7x.
• Analysts expect the number of shares outstanding to remain consistent over the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 8.0%, as per the Simply Wall St company report.

Shaver Shop Group Future Earnings Per Share Growth

Risks

• Sales growth appears stagnant, with total and like-for-like sales essentially flat in FY '25 and numerous references to market maturity; over-reliance on the existing product category mix (primarily shaving and grooming) raises risks of revenue stagnation or decline as core markets mature and limit sustainable growth opportunities.
  
• The increase in store lease renewals-especially with major landlords and for longer periods-is materially raising lease expenses and liabilities, increasing fixed cost intensity at a time of uncertain or slow sales growth, thus threatening net profit margins and return on invested capital.
  
• Specialty retailers like Shaver Shop face escalating competition both during key promotional periods from discount and pharmacy chains as well as from global manufacturers expanding their direct-to-consumer e-commerce efforts; this threatens to erode market share and puts downward pressure on revenues and gross margins.
  
• The online channel showed worrying contraction throughout FY '25, only recovering marginally in the final reporting period, underscoring risks from the broader consumer shift to discount-oriented, high-competition e-commerce platforms, potentially undermining online revenue, customer acquisition, and long-term omnichannel growth.
  
• Increasing value-conscious consumer behavior (fueled by cost-of-living pressures and high sensitivity to promotional pricing) is intensifying margin pressures and incentivizing competition on price rather than brand or service, possibly compressing average transaction values, reducing gross profit, and impeding earnings growth.

Valuation

• The analysts have a consensus price target of A$1.765 for Shaver Shop Group based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of A$2.03, and the most bearish reporting a price target of just A$1.5.
  
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be A$247.2 million, earnings will come to A$18.5 million, and it would be trading on a PE ratio of 15.7x, assuming you use a discount rate of 8.0%.
  
• Given the current share price of A$1.57, the analyst price target of A$1.76 is 11.0% higher.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.