Earnings Call: H1 2021

Feb 19, 2021

Good morning, ladies and gentlemen, and welcome to Shaver Shoppe's Results Presentation for the Half Year Ended 31 December, 2020. Today's call is being recorded. There will be a presentation followed by a question and answer session. With us today is Cameron Fox, Shavershop's CEO and Managing Director together with Larry Hansen, Shavershop's CFO and Company Secretary. If you wish to follow along with the slides, Shavershop's presentation has been lodged with the ASX and is also available from Shaver Shoppe's Investor Center website. I will now hand you over to Cameron Fox. Please go ahead. Good morning, everyone, and thanks for joining us today. So what are year 2020 was? Of course, it's been challenging for our business as well as for our people, but it has also been incredibly rewarding. I'm extremely proud of what we at the Shaver Shop team have achieved and particularly the focus and resilience of our store teams who have lived up to the values day in and day out throughout the pandemic. Our 2021 first half results further illustrate what a strong, successful and differentiated business model Shaver Shop has built over the last 35 years. Let me take you through some of the highlights from the first half before Larry explains the financial results in greater detail. So moving on to Slide 3. Once again, Shaver Shop reported new records across almost every financial metric. Starting with the top line, Shaver Shoppe sales grew 15.0% in the most recent half, driven by 17.3% like for like store sales growth, which in turn was driven by 102% growth in online sales across the corporate store network. Importantly, this incredible sales result was achieved despite approximately 25 of our Victorian locations not being able to trade face to face with customers for almost all of the Q1. This result means we have now delivered 24 months of consecutive like for like sales growth. And with January 'twenty one now behind us, we're up to 25 months, no small feat given what the retail industry has been through over that period of time. The strong sales growth was complemented by gross product margin expansion of 3 40 basis points to 44.7% 44.7% as mix switched to our higher margin hair cutting category and we took a less aggressive approach to promotional pricing. We maintained strong cost control, driving 140 basis points in operating leverage, leading to first half NPAT and earnings per share increasing 85 percent to $14,200,000 and $0.116 respectively. Looking to cash flow and our financial position. Our balance sheet has never been healthier. We generated $41,500,000 in operating cash flow and had $41,100,000 of cash and 0 debt as of 31st December 2020. This put us in a great position to complete the buyback of the last 6 franchise stores for $13,000,000 plus stock on hand in early February. And the Board today declared an interim dividend of $0.032 per share, Even after these significant cash outlays in terms of the franchise buyback and dividends, our balance sheet remains very healthy, giving us increased flexibility to continue pursuing and accelerate, where possible, the omni retail investment activities that have worked so well for us to date. So in summary, a cracking set of numbers for our first half with no contribution from JobKeeper over that period of time. Moving on to Slide 4, operational highlights. You've heard me say many times that Shaver Shop lives and breathes our core categories. It's fair to say we are basically product mix, and we use this passion and expert product knowledge across our core categories to ensure we deliver exceptional service and delight our customers. Despite all the challenges in retail caused by the pandemic, our in store service rating remains exceptional. To handle the increased volume of online questions and home delivery queries, we increased our customer service headcount and added key marketing roles that have started accelerating our progress towards 1 to 1 personalization in our digital communications to customers. This is a great segue to talking about our omni retail progress. Online sales in the first half were more than $40,000,000 across the store network and represented more than 30% of total sales. Shaver Shop is a true omnichannel retailer, but I believe we still have so much more potential to grow from here. We're now up to more than 600,000 customers on our e mail database, what we call our opt in customers, with an increasing proportion of online sales coming from the database each month. Delivery in full and on time for online customers is also critical. And to this end, I'm pleased that we started offering customers multiple fulfillment options providing express and same day delivery choices to our existing home delivery and click and collect alternatives. This was something that was especially important in the lead up to Christmas last year as many logistics providers struggled to cope with home delivery time frames. We also restarted our high volume online fulfillment center over peak online trading periods. This took the load off the store network and enabled those teams to focus on what they do best, engage with and provide exceptional service to our customers. Lastly, the pandemic required our entire business to remain highly adaptable while maintaining a highest priority on the health and safety of our customers and our store teams. Our store teams were exceptional on almost all fronts in the first half. And as a result, this was recognized by Shaver Shop making record bonus payments to our store managers in early January. So moving on to Slide 5. As mentioned previously, our stores and store teams are a key ingredient in Shaver Shop's success and a core part of Shaver Shoppe's omni retail strategy and it's why we focus so heavily on staff training. With most online orders being shipped from the closest store to the customer, our store teams also ensure fast and accurate delivery as well as offering our customers any assistance with after sales service and support they need. We think this is crucial in delivering a true omni retail experience and especially in this category, which has a very specialized products and is often used on sensitive parts of the body. I've talked a bit about our success in driving online sales, but Slide 5 really encapsulates it. On the left hand side, you can see Shaver Shoppe's total sales have consistently increased over the last 5 first halves to reach $123,600,000 You can also see that an increasing proportion of the growth is represented by online sales each year, with online sales growing to almost $40,000,000 for corporate stores and representing 30.4% of total revenue. On the right hand side, you can see that other than in first half FY twenty nineteen, which is when our CMO and Head of Digital and E Commerce joined the business, online sales growth has been exceptionally strong, most recently evidenced by the 102% growth in online sales in the most recent half. Importantly, the online sales growth has been achieved without Shaver Shop truly leveraging our customer database to its fullest extent. We are launching retargeting programs to increase mind share, sales conversion and shopping frequency in the second half of this financial year, and I look forward to being able to share some of the benefits from these programs in due course. And while our online channel has been extremely successful, on the bottom right of the slide, you can also see that our stores outside of Victoria also drove strong sales growth. All states, excluding Victoria, reported 8.9% in store sales growth on average, and New Zealand generated 17.0 percent growth across in store sales. Unfortunately, this was completely offset by the decline across Victorian in store sales of 40.2% due to the extended lockdown experienced in that state across quarter 1, leading to corporate in store like for like sales falling 1.2% for the half. Slide 6 goes to the heart of our service ethos and why our stores remain core to our omni retail strategy. You can see that all our key service metrics have consistently improved and are world class. Our NPS score averaged 85.5 in the first half, and our customer experience score was 9.7 out of 10. These metrics have consistently improved over the last 3 years. I am very proud of this as these metrics best reflect the attitude and the culture across our store teams of more than 700 employees across the store network. Our store managers and we as a management team monitor these metrics daily as well as any direct feedback received from our customers about their experience in our stores. Something else we track is outside and inside foot traffic, so we can manage our controllables and understand what external factors are influencing our results, like outside customer foot traffic. While foot traffic was significantly down in the 2nd quarter in the order of around 25% to 30%, our in store teams were able to almost fully offset this impact through sales conversion increasing 26% to 49.1%. The increase in sales conversion was one of the key drivers for in store sales being up 8.9%, excluding Victoria, as indicated on the previous slide. This is an exceptional result, shows our teams are engaged and providing a valuable shopping experience for the 70 odd percent of customers that still prefer to shop in our stores. I'll now hand over to Larry for the financial results summary. Thanks, Cameron. As we touched on earlier, our first half results were outstanding and continue the record run we've had over the last 2 years or so. Moving on to Slide 8. Please note that all the figures in this presentation are reported using the latest accounting standards and are reported on a consistent basis year over year. For those of you that are still analyzing Shaver Shop's results using the old lease accounting standard, there is a reconciliation provided in the appendix to this presentation. So total sales were up 15%, approximately $16,000,000 to $123,600,000 a new record for the business. This sales growth was combined with gross profit margins increasing 3 40 basis points to 44.7%, driving dramatic growth in both gross profit as well as net profit after tax given our relatively high fixed cost base. Operating expenses only increased 8.2%, leading to a 140 basis points reduction in our cost of doing business as a percentage of sales. All of these factors, together with depreciation and amortization and interest expense being relatively consistent year over year, led to net profit after tax increasing 85.5 percent to $14,200,000 and our basic earnings per share increasing 85.4 percent to $0.116 per share. That's up from the $0.063 per share that we reported at the same time last year. When you adjust for the impact of the franchise buyback tax benefit we received, cash EPS increased 77% to $0.12 per share. I'll now walk you through a bit more detail on some of the key lines in the P and L. Starting with gross profit on Slide 9. Gross profit from a dollar perspective increased 24.6 percent to CAD 55,300,000 driven by sales growth as well as margin expansion. Key to the growth in margin was strong sales in our hair cutting category, a category that we dominate here in Australia with a high number of exclusive lines. While this category has been exceptionally strong for the business over the last 12 months or so, Over the 4 prior years, so the 4 prior first halves prior to COVID-nineteen, it had a compound annual growth rate of 8.9%, driven in particular by sales of beard trimmers and body groomers, 2 categories that we own here in Australia. And so while this category is a strong and a key contributor to Shaver Shop's recent financial performance, this category has been an extremely strong performer for Shaver Shop for many years. In addition to the strong growth in haircutting, we also reported strong top line sales growth across hairstyling, long term hair removal solutions as well as our massage category. In addition to the benefits caused by category mix, Shaver Shop also chose to reduce the depth of discounting offered across most categories during the half. This was particularly the case in the lead up to Christmas and was implemented across many of our higher selling and exclusive models. That said, we remained very price competitive on our trade wide range, something that we've been doing for many years. The overall result of these initiatives was that substantially all categories had higher gross profit margins as well as higher gross profit dollar contributions in the first half. Pleasingly, our strategy of working with suppliers to secure exclusive access to new and innovative product lines also continued to work with 24 of our top 30 products by sales in the first half, being exclusive to Shaver Shop. And finally, going to the quality of our sales and earnings, contribution continues to be broadly spread across our product portfolio, with no one product contributing more than 2.2% of sales in the first half. Moving on to Slide 10. As touched on earlier, Shaver Shop drove 140 basis points of operating leverage in the first half. The biggest contributor to this was a drop in store roster costs as a percentage of sales. This was partially due to the extended lockdown here in Victoria, where we were forced to reduce the number of staff hours in store. Importantly, Shaver Shop did not receive any JobKeeper subsidies in the first half or last year for that matter. Occupancy costs benefited from around $500,000 in rent abatements negotiated and agreed with landlords in the first half. We don't expect any material abatements in the second half, that is unless there are extended store closures required in any states due to government imposed trading restrictions. Marketing costs increased by about $500,000 but it still represents around 3.5 percent of sales. For those of you that have been following us for some time, you'll note that we've now split out operational costs from other expenses to try to get some additional visibility on the key drivers of our cost base. Operational costs are largely the variable costs required to run the stores, including merchant and other transactional fees, consumables for stores as well as postage for online orders. You can see the impact of the higher proportion of online sales in the operational expenses line, which increased around $1,300,000 year over $1,300,000 year over year and as a percentage of sales increased approximately 60 basis points to 4.4%. So overall, costs were once again well managed within Shaver Shoppe's business, driving 140 basis points of operating leverage. On Slide 11, you'll see that the key drivers of net profit after tax growth was the incremental contribution from our like for like stores, which led to the growth in NPAT from $7,600,000 in the first half of twenty twenty's financial year to $14,200,000 this year, an 85% increase. The contribution from our like for like stores was only slightly offset by higher direct marketing, corporate overhead and other expenses. Moving on to Slide 12. Shaver Shop has delivered relatively consistent growth in first half NPAT between FY 'seventeen and FY 'twenty. This, however, has accelerated strongly in the most recent half. This time last year, we are very pleased to be sitting here and reporting record NPAT and EPS results. But these have been well and truly equipped this year with our basic earnings per share increasing 85.4 percent to $0.116 and cash EPS increasing 77.6 percent to $0.12 per share. For those unfamiliar with our reference to cash EPS, Shaver Shop has an ATO private ruling that allows the company to deduct the cost of terminating the franchise license associated with a franchise buyback over a 5 year period using a straight line calculation methodology. This tax deduction results in our actual income tax payable being lower than income tax expense on the P and L over that period, all else being equal. So cash NPAT reflects a tax benefit from our franchise buyback program and is a closer representation of the cash profits the business has generated in the reporting period. Importantly, because the latest buyback of the last 6 franchise stores occurred in February 2021, the annual tax deduction associated with these buybacks will be fully reflected in our second half cash EPS number and will represent for those 6 stores alone around $0.06 per share. Moving on to our balance sheet. Shaver Shop ended the half with $41,100,000 in cash and no debt. As is normal at this time of year, our cash balance at 31 December benefits from extended trading terms received from suppliers for Christmas stock purchases. This is why you see our trade payables balance being $41,200,000 at the end of December 2020 compared to only $18,000,000 6 months earlier, and I expect this trend to continue in our second half of this financial year. Pleasingly and continuing on from the trend in the second half of last financial year, we were able to significantly increase inventory turns in the first half and keep average stock levels in store significantly lower than the same time last year. We achieved this without any noticeable impact to sales, which was a tremendous result by the buying and merchandise teams as well as our store teams who were able to switch sell to other lines when a few of our top sellers ran low on stock. In looking at our lease assets and lease liabilities balances, you should expect to see these reduce in future results given we are only committing to 2 or 3 year terms in our renewal negotiations with landlords as we continue to evaluate tenancy mix across the centers that we operate in. Finally, our net asset balance grew to $75,000,000 the highest level of business as reported since inception. Even with this higher balance though, our return on equity is close to 20% for the first half alone, reflecting the continued efficient use of capital within the business. Moving on to our cash flow statement. Operating cash flow has improved 41.7 percent to $41,500,000 in the first half, benefiting both from the significant growth in profitability as well as reduced working capital investment, most particularly in stock. Shaver Shop continued to invest for growth, completing 2 full store resets at Carousel and Katara in the first half as well as continuing our omni retail investments in our CRM and e commerce platforms. The $5,900,000 in dividend paid in the first half reflects the payment of a $0.021 per share special dividend in July that was a replacement for the canceled FY 2020 interim dividend as well as the CAD0.027 per share fully franked final dividend from last year, which then leads us on to Slide 17 and the trend in our sorry, Slide 15, I should say, and the trend in our dividend payments. Shaver Shop's Board today announced a $0.032 per share fully franked interim dividend, which represents a 52% increase over the $0.021 per share dividend that was only 80% franked this time last year. This represents the 4th consecutive year that we have increased shareholder returns through our interim dividend payout. Today's dividend announcement reflects the Board's decision to balance the desire to continue increasing dividend payments with both the opportunities it sees to continue investing to drive Shaver Shot's growth, and this is most recently evidenced by the acquisition of the last 6 franchise stores for just over $15,000,000 including stock as well as the desire to retain a degree of fiscal conservatism to mitigate some of the ongoing trading risks associated with COVID-nineteen. I'll now hand you back to Cameron, who will take you through our trading update and outlook. Thank you, Larry. The 1st 6 weeks of the second half has started strongly with total sales up 17.3% through February 11, driven by like for like sales growth of 17.6 percent and online sales growth just above 100%. Gross profit margins are relatively consistent with the 1st 6 weeks of last year, reflecting the consistent application of our Boxing Day catalog sale throughout January as well as our typical off promotion period in February. The category trends from the first half are largely continuing with haircutting, hairstyling and long term hair removal continuing to see strong sales momentum. Importantly, Shaver Shop now has full control of our store network, which will simplify internal processes and drive improved customer experiences over time. Lastly, we started full store refits or relocations at Erinefaire in New South Wales, Epping in Victoria and North Lakes in Queensland. In terms of outlook, the retail trading environment remains quite strong, albeit incredibly volatile and difficult to predict given snap lockdowns appear to be a reoccurring theme across many states. We believe this is likely to be the case for months to come. So while we have started the second half strongly and look forward to being able to report a pleasing FY 2021 result in 6 months' time, due to the ongoing uncertainties caused by COVID-nineteen, Shaver Shoppe's Board does not consider it appropriate to provide sales and earnings guidance at this point in time. So as a wrap up, let's just go through our investment summary. Shaver Shop operates in a large and growing market driven by changing consumer preferences and new product innovation. We still have significant potential to further increase our market share in a large category. Over the last 35 years or so, we've developed an incredibly strong and trusted brand in Australia, and we are well on our way to replicating this in New Zealand. Our specialty retail business model is agile, differentiated and resilient and is based around customer service excellence and unparalleled product knowledge, product exclusivity and competitive pricing. The investments we have made in building our online capabilities in the last 2 to 3 years means we are now a leading omni retailer in our core categories with strong online sales growth. We have an exceptional balance stream, 0 debt and have strong cash conversion. We also have an experienced management team that has executed extremely well over challenging periods. And finally, our Board and leadership team is focused on investing for growth and improving total returns for shareholders as evidenced by the continued increase in the interim dividend. Thank you for your time today. And that concludes the investor briefing. I'll hand over to Kayleigh, our moderator, who will ask the questions from the audience. Thank Your first question comes from Danny Yunus with Shawn Partners. Please go ahead. Hi, Cameron. Hi, Larry. Congratulations on a really strong result. I'm actually finding it very difficult to find any fault with the result, but I've got a few questions, if I can. So The first one is around gross margin. So that was significantly better than what you were forecasting a month or so ago. So if you were to look at a crystal ball, at what point does reversion likely occur back to your historical average over the last 4 years of your gross margins being in the realm of 40% to 42%. Clearly, you've got the customer demand forward pull and you've got the less discounting lever. But longer term, is 43%, 44% the new optimal gross margin? Or should we see a reversion back to around 40% to 42%? Yes. Thanks, Denny. Really difficult question to answer. I mean, clearly, we're seeing the trends that we saw in the first half continue so far in the second half of hair cutting being one of those categories that has really continued to be quite strong for us early in the second half. I do believe at some point, there will be a normalization in the margins back to the order of, I think you said 40% to 42%, it's I would say closer to 42% to 43% would be the long term average for the business. But that I would expect is probably 12 months to 24 months away. I do think as we put in our trading update and outlook, there's already been a bit of a reversion to our historical margins from last year as our 1st 6 weeks of margins for this year, this financial year roughly the same as the 1st 6 weeks of the second half last financial year. But I think that's still the strong trends that we're seeing in haircutting and some of the other categories where we've been able to drive margin expansion mean that hopefully, it's not a quick reversion. It's some time still to come. Okay. Thanks for that. That's helpful. The second question is around the sales conversion. That's gone from 39% to 49%, and which looks like a pretty strong move considering foot traffic is down 20%, 25%, 30%, depending on which retails you speak to. Can you maybe talk about that sales conversion rate across the 3 different buckets like in store traffic conversion, database, 1,000 that you've got there, the conversion that you're getting on there versus, say, those that are directly going to online and searching? I'll certainly you mentioned about the in store conversion first, Danny. I think we've mentioned a number of times that our percent of traffic, what we're certainly seeing is put traffic down around 20% to 25%. And that seems to be broadly consistent by each region. Some variances are broadly pretty consistent. But what we are seeing is a higher propensity of customers to spend. So those customers who have made the decision to go to a shopping center, I think, are doing less so browsing and hand around in food courts, etcetera. So the propensity there is to spend, and I think that's where our investment in staff training, product knowledge and having really good customer service levels is paying off. The staff are hungry. They're able actually to spend a little bit more quality time with each customer as well because the foot traffic is down, and that's leading to significantly higher ratios of conversion as well as higher ATV as well. So in many respects, ironically, the in store environment, I actually think, suits specialty retailers very strongly because they're able to invest quality time with people about the decision to buy a product that's best suited to their skin type or how to use it on their body, etcetera. It's obviously a very personal decision. In terms of the online sort of numbers that we're seeing, we're basically seeing a lot of repurchases now come through from the existing database numbers, which have effectively doubled in 12 months. And we're seeing that a lot of traction a lot of those users are new users and they've started to come back and repurchase. So I feel, Danny, we're pretty well positioned as the omnichannel retailer because we kind of benefit no matter which way it swings. If there's a if the situation normalizes, we've obviously got Abbricks and Mortar business to capitalize on that. Having said that, if there's a extended lockdown, obviously, our online business kicks into gear. We would have that heavy investment over the last 2 years and we're seeing the benefit now of that increased database. Right. And with the rollout of the CRM, is the expectation that, that conversion rate could foreseeably increase further? Absolutely, Danny. Yes, online certainly. I think a number of measures, conversion to increase repeat purchase, ATV and basket sizes, well, units per transaction. I think that's a big opportunity for Shaver Shop in that. We're very good at selling the finished items like electric shavers or beer trimmers, but we need to connect with those customers after 6 months or 12 months to say they need to buy a new foil to keep the electric shave optimized. And again, we dominate those categories. So the commodity type categories related to our business were very, very strong and margins are excellent, but we need to actually reach out and be a bit more proactive in reminding people that repeat purchase is required after a certain period of time. And I think that's where we can significantly leverage that database growth. And, Danny, just to cut in there, the percentages that are referred to on that slide, the 49.1%, just to be clear, that is in store sales conversion only. It does not include online sales, just in case it was not clear. Sure. And the next question is around those 6 new stores you've acquired in February. In first half twenty twenty one, according to the press release, they did about $8,800,000 revenues for 6 stores. So let's say double that for the year, dollars 15,000,000 to $16,000,000 So roughly, the average revenue per store is about $2,600,000 $2,700,000 Is there a big dispersion between the 6 locations? Are they all around that median $2,600,000 $2.7 1,000,000 turnover? And what's the likely change in strategy from moving them from franchise to corporate owned? Well, firstly, Damian, they're certainly all key stores, all very strong. So it's probably the possible exception or the weakest store within that mix. You'd probably say Blacktown. I think Blacktown, you'd call, is a probably a B grade center that's growing into an A grade corridor. All the other stores, Chatswood, Castle Towers, Gallery CBD, they are without question A grade, Parramatta, Burwood. In terms of our I guess since we've acquired a Downhill and why, there's a number of reasons. They're fantastic growth stores. Obviously, they have a very high online catchment as well, which previously was going to those franchise stores. Effectively, those stores formed a ring around Sydney Metro. So by buying back those stores, obviously, we benefit from buying picking up the bricks and mortar customers, but we also benefit because we pick up the online corridor across Sydney Metro, which is critical. From a branding point of view, Danny, I think the key from our point of view is some of the differences in Ethos between corporate store and franchise stores was in relation to after service care. In terms of if there was a product issue or warranty issue, our ethos is across corporate stores, we always look after the customer. And there was a slight different perception around that with those 6 franchise stores. So we feel we can apply customer service standards a little bit more consistently across such a key region now in Sydney Metro, and we feel that apart from the commercial benefit that it is a long term branding benefit by buying those 6 franchise stores and ensuring the customer service standards, the policies around returns are now consistent across every single store in Australia and New Zealand. Right. And just a final one, just on the outlook. Clearly, things in the first weeks don't appear to have slowed down. So that's a fantastic result for you guys. You've talked about in the investment summary a further increase in market check. And you maybe talk about how you are likely to execute on that. Is it more new store openings post the acquisition of these last remaining 6? Is it pushing further into New Zealand? Is it trying to garner more exclusivities across your SKUs? How do you see that increase in market share playing out strategically? What exactly should we be looking for there? Well, I think there's a couple of different strategies, Damian, depending on the market. So New Zealand is a bit of a no brainer in our opinion. We've got 7 stores doing exceptionally well. Growth, we're very pleased with, but our brand awareness is still quite low. So the obvious opportunity in New Zealand for growth is some more stores. We'd like about another half a dozen stores in New Zealand in the right locations, obviously, that can really drive that brand awareness to levels similar in Australia. Because we're finding very similar market conditions in New Zealand as in Australia, we have a high ratio of exclusives in New Zealand. Customer demand is significant for our categories. Average transaction value is very similar. So it's a really prosperous market. We just need a few more stores. Australia is probably a little bit different. Obviously, we've mentioned in the past, our investment in Australia will continue to go into digital and ecoms. Very, very cautious about new stores in Australia. Generally, our capital and our investment will continue across the digital channel. We have to be an absolute no brainer, Danny, for us to invest in new stores in Australia. And I think in Australia, what we're continuing to do is make sure that all the new product innovation, key product lines, we have a stranglehold on the category through exclusives. And you've heard Larry mentioned before, 24 of our top 30 lines were exclusive over the half. And clip and trim were particularly dominant in. And then we've also got category expansion, Danny. We've obviously expanded to fragrances over the past 18 months, which we're very happy with. And we continue to expand our range across some of those growth categories, which are really underrepresented in Australia, such as long term hair removal solutions. There's an enormous channel switching opportunity for Shaver Shop. We know that IPL treatments, laser treatments are a monstrous business in Australia through beauty salons. Shaver Shop obviously sells that same technology and was a market leader in that in DIY home use. And obviously, in the current climate, with a lot of beauty salons being closed and impacted, we're finding the ladies are very keen to trial DIY long term hair removal solutions, which we, as I said, are very, very dominant in. So we see that as one category that's going to provide significant growth for a number of years. Excellent. That was very good. Thank you very much. Your next question comes from William McDiarmid with Ordinance. Please go ahead. Hi, Cameron and Larry. I think, Danny, took all the good questions, but I've got a couple. Just playing off one of the questions just a few moments ago on growth in New Zealand. Do you have a rough time line on when you'd like to see those additional half dozen stores rolled out in New Zealand? Yes. It's a good question. I mean, ideally, I'd love them tomorrow, but we also like everything. We don't want to show our hands to the landlords too much as well because we obviously want to make sure that they're the right location and the right deal. Travel is a little bit difficult at the moment, obviously, but it's fair to say we are looking at site locations in New Zealand right now. So I would hope that we at least have a couple of new stores in New Zealand Certainly, prior to the all important Christmas trade of this year, hopefully, we'd have at least 2 or 3 stores, the right stores in New Zealand this year to get us that scale that we desperately need. Okay. That's interesting. In terms of the product mix between in store and online, can you talk about the dynamics around that? I mean, are you sort of getting new customer capture in store around maybe haircutting and then they go to online and they're buying more of those consumable items? And you did allude to this, the margin impact of that. So it's repeat purchases, but that might be the margin? Yes. I mean in terms of the repeat I'll deal with the first question first. In terms of the repeat purchases coming in, a lot of those and we're trying to leverage the database going forward and just really retarget those customers with the consumable products, like our guard range, for example. Those have extremely high margins. And so at the moment, the category trends online have lower tend to have lower than company average gross profit margins online. And part of the reason for that is the strength that we're seeing in the long term hair removal solutions category, which I think what happens there and we're yet to be able to tie in our customer behaviors in store with online and track that this is actually happening, but this is what we expect is happening. The customer may go into a store, talk to our store staff, understand the how long term hair removal solution IPL unit works, how they should best use it. Then they go online, do some more research, maybe come back into the store and buy it or often choose to buy it online because they realize that Shaver Shop has the broadest range and often the best price IPL units in the category. And so that tends to lead to some of those, like that particular category having a higher proportion of sales online than in store. And that category has a lower than company average margin. So it's slightly lower online overall from a category mix results and slightly lower gross profit margins online. But that's something I think with retargeting those customers through those consumable products, we're looking to close that gap over the next 12 to 24 months. Okay. That's clear. And then just finally, just in terms of the inventory, obviously, carrying lower inventory than the same time last year. Is that partly related to any shipping concerns and any risk of perhaps in the sales we're going to the second half? No. Look, I don't it's a very fair question, but I don't think so. I think where we've gotten far better as a business is actually managing our inventory and leveraging our greatest strength, which is our store teams. Our store teams, their ability to align their merchandising and their selling skills to our promotional program, honestly, second to none. So I think that's really been able to make sure that we get the right inventory of the right lines that we're promoting into source. And some of those slow moving stock lines that we may have carried in the past would really clean up. So I think overall, certainly from my point of my perspective, in the 15 years I've been here, I don't think we've ever been so strong in managing inventory and getting the inventory right at each store location. Okay. Great. So you wouldn't expect to have those sort of big inventory build when we get to the end of the financial year as we get a little bit of a version of that? No. No, I think this is the new base that we the new levels we're seeing are effectively at our new base that we will be operating on moving forward. Your next question comes from Rodney Dan Royden with who is a Private Investor. Please go ahead. Hi. Hi, Rodney. Yes. Thanks again. Great results. Great questions. 2, so mine are going to be quite general. So for both of you, one is just any I really like to focus as a customer and a shareholder on customer service and getting people what they need and optimizing their purchase for them as a customer and you as a business. So any good news stories, I guess, you'd like to share? I mean, it's been a great financial sort of set of results, but any sort of on the ground good news stories you want to share? Well, I think for me, it's partly incorporated with the NPS results. And I know their numbers. Our customer service score of 9.7 out of 10, that's just incredible. And I read the customer feedback comments every morning. It's the first thing I do through the radar pads. And what just comes through is the customers, even in the current climate, has almost made good customer service stand out more. So our customers seem generally appreciative that our guys are authentic. They're respecting the social distancing. All the measures are there with the hand sanitizers, but they're providing just really good honest service, and they're smiling. And to me, that's kind of what it's all about is you've got people at the store level that generally are really engaged and love this business, and it comes through when you're on the floor. And they know their products inside out. That, to me, is it's a heart of retail. It means everything given how challenging it's been over the last 9 months. It's been tough for a lot of people, but they've come to work, they've put on a smile and they've done an amazing job. Great. And that's what I mean about using tough times to build brand loyalty and make an impression. So a good one, too, which I think will last. And so that builds to my second question, too, which is great. In terms of customer mix, and obviously, being a public call, whatever you want to disclose, but have you noticed any major changes or trends with your customer mixes, demographics? Not particularly. So our demographics have generally been roughly 50%, a little bit more than 50% women customers versus men. That's now revert to roughly fifty-fifty based on the latest data that we have for online only. Again, we're not gathering the data in store yet. We hope to be able to start gathering that in the second half of this year. In terms of the demographic changes, where we're looking to try and grow and where we I think we have grown over the last 12 months is in sort of the younger demographic, sort of the 19 to 35 year olds, which is where we've been really focusing a lot of our attention on Facebook advertising and social media spend. So that has significantly increased year over year. And we see that as a real growth opportunity for the business. Some of our historical market research shows that we have strong brand awareness and appreciation in the older demographics, particularly men. But where we see the biggest opportunities in that younger demographic, and we're starting to get that coming through some of our social media advertising and online and digital advertising. Correct. Thank you. There are no further questions at this time. That does conclude our conference for today. Thank you for participating. You may now disconnect.