Shaver Shop Group Limited (SSG) Earnings Call Transcript & Summary

Ladies and gentlemen, welcome to Shaver Shop's Results Presentation and Investor Conference Call for the financial year ended 30th June 2021. Please note that today's call is being recorded. [Operator Instructions] Presenting today will be Cameron Fox, Shaver Shop's CEO and Managing Director; and Larry Hamson, Shaver Shop's CFO and Company Secretary. If you wish to follow along with the slides, Shaver Shop's presentation has been lodged with the ASX and is also available from Shaver Shop's Investor Center website. I will now hand you over to Mr. Cameron Fox. Please go ahead.

Thanks, Jen. Good morning, everyone, and thanks for joining us today. We are pleased to present our results presentation for the 2021 financial year, a defining year for Shaver Shop on a number of levels. First, as we'll take you through shortly, we posted another year of record financial results, this time smashing our NPAT record up 68.3% to $17.5 million, which is at the top end of our guidance range. Secondly, we've now transformed into a fully owned corporate store network with the buyback of the last 6 remaining franchise stores in February 2021. Third, our New Zealand business performed exceptionally well with profitability up fivefold. We've now proven our business model works in markets outside of Australia. And lastly, we achieved this in a year which was extremely uncertain and difficult to predict. Our business model has once again proven its resilience with a trend towards DIY hair removal and personal care solutions accelerating strongly. So with that overview, let's get into some of the highlights of last financial year. Shaver Shop's total sales eclipsed the $200 million mark for the first time, up 9.6% to $213.7 million. A key contributor to this sales uplift was growth in online sales, up 41.1% to $61.2 million. We'd said that Shaver Shop is a true omnichannel retailer before, but with 28.6% of our sales now having been generated online, this fact cannot be disputed. The sales growth was complemented by strong gross profit margins, up 240 basis points to 44.3%. With costs well controlled, this led to NPAT increasing 68.3% to $17.5 million and earnings per share up 66.2% to $0.142 per share. Importantly, this result was achieved without any form of JobKeeper support. Shaver Shop's history of generating strong cash flow conversion continued with operating cash flow of $36 million. Our stock position remains extremely clean, probably the cleanest position I've seen since joining the business 15-or-so years ago. This helped at end 2021 with $7.4 million of cash on the balance sheet and no debt. While this is a lower net cash position than we had at June 30, 2020, you may recall there was around $7 million in [ phasing ] issues that benefited last year's ending cash position and that unwound over the course of FY 2021. We also acquired the last 6 franchise stores with cash on hand. So to achieve a $7.4 million of net cash at 30th June 2021, is actually a very strong result, all things considered. Finally, in terms of capital, we've remained focused on increasing shareholder returns by returning $9.9 million to shareholders by way of dividends in the 2020 financial year. Shaver Shop's Board also today announced a $0.050 fully franked final dividend, up 85%. This brings total fully franked dividends for FY 2021 up to $0.082 per share, up 71% on last year's $0.048 payout. We also continued our omni-retail investments through further improving the online customer experience, upgrading the look and feel at 6 of our key doors and further investing in our CRM to drive actionable insights that will further enhance customer experience. The last slide focuses on our financial results. The next one looks at our underlying operational achievements or effectively the inputs that drove Shaver Shop's outstanding financial performance. First and foremost, the safety and wellbeing of our team members was our #1 priority throughout the pandemic and that will continue in the future. We have probably taken a more conservative approach than some other retailers when there's a risk to staff or customers, but we believe this is in the best long-term interest of our business and indeed the wider community. Product knowledge and customer service excellence have always been the hallmarks of Shaver Shop's value proposition, and I'm incredibly proud of the way our store teams have represented our brand values over the last 18 months. Our NPS and customer experience scores are at all-time high, reflecting the passion and dedication of our store teams. It was also reflected in the sales conversion, which was up 9% in the year to 43.25%. We also increased our customer service team in the support office to handle the increased number of inquiries we received, particularly around online deliveries and implementing automated features like live chat on the website to accelerate response time for commonly asked questions. Our in-store fulfillment model for online orders continues to perform exceptionally well with 97% of online orders being picked and packed within 24 hours from the time the customer order is received. This has helped us significantly improve customer satisfaction ratings over the last 12 months. It has also enabled our store team to remain as engaged as possible during the lockdown periods. These and other omni-retail investments have continued to deliver returns with active customers up 122% to almost 500,000 over the last 12 months, and our e-mail and marketing database is now reaching 800,000 members. The omni-retail foundations we have in place will stand us in good stead when trading conditions return to some form of normality, whether in the near future or in the months to come. Let's move on to Slide 5 and look at our revenue drivers in greater detail. Despite the lockdowns over the last 12 months, our stores remained a critical part of Shaver Shop's offerings and have been quick to rebound when trading restrictions have lifted. Unsurprisingly, with concerns over the pandemic and significant number of stores being closed temporarily last financial year, we saw our like-for-like in-store sales declined by $2.5 million. However, this decline was more than offset by the contribution from the online channel, up $17.3 million (sic) [ $17.8 million ] to $61.2 million as well as a 5-month contribution from the 6 franchise that were bought back in February 2021, leading to total sales being up 9.6% to $213.7 million. Now from a category perspective, we saw strong sales growth across hair cutting, hair styling, massage, power oral care and long-term hair removal solutions. This was partially offset by declines across men's manual shaving and, to a lesser extent, by men's electric shavers, given the trend we've seen that men tend to shave less during lockdown periods. We expect these categories to return to positive category growth when lockdown restrictions ease and our customers more regularly go back into an office environmental setting. Importantly, 26 of our top 30 selling lines were exclusive to Shaver Shop last year. This reflects the influential position we have in this category as well as the strong relationships we continue to forge with our suppliers. Our multichannel model has proven its value as our customers and we have adapted to meet their needs. And as we have previously noted, contribution margins from our in-store and online channels are both very strong. So we remain somewhat ambivalent regarding how our customers choose to shop with us, which is ultimately the essence of being a true omnichannel retailer that is purely focused on the customer and their needs. Moving to Slide 6. Slide 6 shows our quarterly sales contributions over the last 3 financial years. You can see that in comparison to FY '20, quarterly sales grew strongly across each of the first 3 quarters. And as expected, it was more difficult to comp quarter 4, given the extremely strong performance in the prior comparative period. The first quarter in FY '21 had the highest growth rate compared to any other quarter in FY 2021 at 36.4%. Now we're comping these figures right now. So please take this point in mind when we get to our trading update. July 2020, in particular, was an incredibly strong period for us, where exceptional sales growth was compounded by gross profit margins being well above our long-term averages. So as you can see by the sales table to the right, quarterly growth rates in comparison to FY '20 then moderated with salon, barber shops and retail, in general, reopened and government stimulus packages dissipated in the second half of the financial year. That said, when you look at Shaver Shop's total sales performance against 2 years ago, there is less volatility in growth rates, as you can see in the right column of the table. Total sales were consistently up more than 20% on a 2-year basis with the second half also benefiting from the franchise buybacks completed in early February 2021, as we previously mentioned. Moving to Slide 7. Slide 7 shows how the omni-retail investments that we called out in early FY 2019 have underpinned the exponential growth in online sales over the last few years and led to online channel now representing close to 29% of total Shaver Shop sales. Our focus has been on improving the full customer experience from the simplicity to find products and navigate our website, offering multiple payment options, including various buy now, pay later schemes, streamlining the checkout process as well as accelerating the whole fulfillment and logistics operations. At the same time, we focused on increasing the number of active customers we deal with annually as well as growing our e-mail marketing membership. As I mentioned previously, active customers now stand at almost 500,000, up 122% on FY '20, and our e-mail membership is now 800,000 strong and counting, almost doubling in the last 12 months. I am pleased with the strides we have taken in the last 12 to 24 months to improve how we communicate with our customers. However, there is still so much more we can do, particularly in the areas of social media, data analytics, and creative content that not only drive sales and conversion results but further entrenches our brand as the leader in grooming and personal care. To this end, we'll be implementing additional capabilities like artificial intelligence to assist with the personalization process and help us deliver more targeted and engaging marketing communication to our membership base. Now moving on to Slide 8, which is one of my favorite slides because it goes to the heart of who we are as a business. These measures are store controllables that ultimately define our brands and are key contributors to what will drive repeat consumer purchase, higher referrals and greater customer lifetime value. Our stores and our store teams remain one of our key assets and differentiate Shaver Shop from other retailers that seek to compete with us in this sector. Net Promoter Score, a measure of customer satisfaction with their shopping experience, was consistently around 89 out of a maximum of 100, reflecting our store team's focus on customer service excellence. The same is true for our customer experience scores, which measure things like store layout, shop person friendliness, product range, and product knowledge. Like our Net Promoter Score, customer experience was consistently at exceptional levels, ending the year at 9.8 out of 10 in the June quarter. The trend in our customer service metrics has been positive for the last 3 years and reflects our store team's passion for delighting customers each and every time they entered one of our stores. Our focus is to at least maintain these high levels as we look towards the future. Now that brings me to Slide 9, which tries to explain how customer behaviors have changed and how Shaver Shop has adapted accordingly. Over the last 18 months, there has been a dramatic change in shopper buying habits and trends following the onset of the pandemic. Our customers still need to look and feel at their best. Whether it's for a Zoom call or for [ their lighter ] Insta, TikTok posts, they are making choices that reflect their changed circumstances. Men are increasingly wearing beards or stubble, albeit it's groomed beards and groomed stubble. Parents are getting used to cutting their kids' hair, sometimes badly, in all fairness, but they're getting used to it at least. With salons closed, women are willing to consider DIY longer-term hair removal solutions such as IPL products as well. Dentists is another great example. With dentists, massage and physio clinics closed, except for critical procedures, our customers are looking to home-based massage stores, like the [ cutting guns ], the high-quality electric toothbrushes that most closely replicate the benefits they would receive from these services. Shaver Shop sells the tools that help our customers maintain their health and beauty regimes at home. When stores are open, our customers want an efficient sales experience with special advice so they can limit their time in public surroundings. They are increasingly willing to buy online, and with spending being diverted away from travel and other leisure options, will transact where they see value for money. Demand and supply in some cases can change rapidly, which means having strong relationships with suppliers is more important than ever. This has always been a competitive advantage for Shaver Shop given our dominance in our chosen market segments. Now a lot of Shaver Shop's core values is adaptability, and it's something that has held us in good stead over many years. To accommodate the constantly shifting retail dynamic, we have been editing our range, working even more closely with suppliers, adjusting our stores to operate as dark stores when they're required to be closed and continually refining our offer and our depth of range to meet these new and changed customer needs. I'll now hand you over to Larry, who will take you through the financials in a bit more detail.

Thanks very much, Cameron. I'm on Slide 11, our profit and loss statement for FY 2021. Before I begin explaining the results in more detail, please note that this is our reported result, reflecting the application of the new lease accounting standard in both years. Also note that with the recent IFRS Interpretations Committee decision released in March 2021, we have changed our accounting policy in relation to the capitalization of configuration and customization costs associated with cloud-based software platforms. This resulted in a small reduction in the profitability of the 2020 financial year but had an immaterial impact to 2021. A reconciliation reflecting the impacts of the change in accounting policy is reflected in the appendix to the presentation together with a reconciliation to the old lease accounting standard. So let's get into the results. As Cameron mentioned, sales were up 9.6% to $213.7 million. Compounding the strong result was an increase in gross profit margins by 240 basis points to 44.3%, also a record since Shaver Shop IPO-ed in 2016. This led to gross profit in dollar terms growing 16%. While franchise royalties were flat year-over-year, royalties will no longer be recognized following the acquisition of the last 6 franchise stores in February 2021. Operating costs were also well controlled this year and benefited from around $800,000 in rent abatements from landlords as well as reduced employment costs as rosters were cut back during lockdown periods, particularly in Q1 and early Q2 in Victoria. This will be an ongoing feature as we look towards FY 2022, with the bulk of our store teams being stood down as various regions have been in lockdown across the first couple of months of this financial year. These were contributing factors to cost of doing business as a percentage of sales declining 110 basis points to 25.8%. In terms of the $0.5 million increase in depreciation and amortization, this was primarily due to the increase in the number of corporate-owned stores during the year and the associated amortization of the right-of-use assets associated with these stores. Interest expense primarily reflects the value of the interest recognized on the store lease portfolio, given we drew no bank debt during the year. Lease interest decreased by $0.5 million, reflecting our decision to only renew leases for 2 or 3 years on renewal, given the uncertain nature of tenancy mix at present. Finally, in terms of net profit, we reached the top end of our guidance at almost $17.5 million, up 68.3% on last year's $10.4 million result. This led to basic earnings per share increasing 66.2% to $0.142 per share. And after adjusting for the $1.7 million tax deduction we will recognize on the franchise buybacks that have been completed over the last 5 years, our cash NPAT was $19.2 million, leading to cash EPS of $0.155. Slide 12 shows the key drivers of NPAT growth with our like-for-like store network driving almost all of those $7.1 million increase in NPAT to $17.5 million. To be clear, for this analysis, we have defined like-for-like stores, one that Shaver Shop owned and operated for all of FY 2020 and FY 2021, regardless of whether the store was impacted by retail trading restrictions across the year. So if a store was closed for in-store trading but still fulfilled online orders, effectively an online distribution hub or a dark store, it was still included as a like-for-like store for this analysis. To be clear, this is different to how we've defined like-for-like sales growth for the purposes of our trading update, given the huge impact the recent lockdowns across New South Wales and Victoria and the ACT in New Zealand for that matter are having on our in-store trading at present. The other key positive contributors to NPAT growth were the 6 franchise buybacks that were completed in February that delivered almost $0.5 million in incremental NPAT after taking into account the reduction in franchise royalties year-over-year. Pleasingly, this was in line with our expectations for those buybacks. Slide 13 shows our normalized basic earnings per share trends over the last 5 years since listing on the ASX. You can see that since that time, our EPS has grown strongly following the Daigou and Dafni-supported results in FY 2017. 2021 was an exceptional result and, we believe, reflects the underlying trends towards DIY personal care and the resilience and differentiated nature of our business model. Clearly, 2021 was an unusual year where Shaver Shop benefited when barbers and hair salons were closed due to COVID-19 trading restrictions and people still had personal care and grooming needs. However, the quantum of this benefit is very difficult to quantify. The upside from all this is that Shaver Shop became known to many new customers with many of those choosing to remain -- to receive, I should say, e-mail marketing communication from Shaver Shop as evidenced by the increase in the database to 800,000 members. So our priority now is encouraging those customers, those new customers as well as the loyal customer base that we've had for many, many years to continue shopping regularly with us in the future. Moving on to our balance sheet on Slide 14. Shaver Shop remains in a very strong financial position. We ended the year with $7.4 million in cash and did not need to draw down any amount from our $30 million debt facility across the financial year. As foreshadowed this time last year, we did increase stock levels by $3 million to $18 million but fell slightly short of our prediction of a $5 million increase year-on-year. We chose to maintain a relatively conservative stock position coming into the 30th of June this year, given the uncertainties around the Delta variant spreading in New South Wales as well as the snap lockdowns that occurred in Q4, particularly in Victoria. We don't believe this lower stock position had a material impact on sell-through. And as Cameron highlighted earlier, our stock position is exceptionally clean. You can see that right-of-use assets and liabilities have been decreasing over the last 12 months. This reflects our decision to renew store leases for shorter lease terms, generally between 2 and 3 years. And finally, Shaver Shop has again generated strong returns on invested capital with net profit as a percentage of shareholders' equity increasing to 24.1% in 2021 from 16.7% in the prior financial year. Moving on to cash flow. Shaver Shop's operating cash flow was again very strong at $36 million. While this is slightly lower than last year, you will recall that we had deferred around $2.7 million in rent payments in the fourth quarter of 2020, and we pushed stock to ultra-low levels as we tried to generate liquidity while balancing the very high levels of demand we had at that time. So overall, it's an exceptional result once again. If you compare the cash balance to the $41 million, which existed at the 31st of December 2020, the beginning of the second half, the decrease in cash is due to the following 3 factors. Firstly, our business models always involved getting extended trading terms from stock suppliers in the lead up to Christmas. This means we sell through the stock for Christmas before we need to pay our suppliers, and it's the key strength of our model. The change in our trade payables balance between December 31, 2020, and June 30, 2021, has always reflected this and resulted in a $22 million outflow in this most recent financial 1.5 years. Shareholders should expect a similar type of cash outflow in the second half of 2022 and in the years to come as we expect to continue using this key strength of our business to drive strong operating cash flow during that key Christmas trading period. Secondly, we acquired the last 6 franchise stores for around $14.8 million in cash in what will be a very accretive deal for Shaver Shop. And finally, in the second half, we paid a $0.032 interim dividend that amounted to around $4 million returned to shareholders. So in total, this resulted in an outflow of around $40 million in the second half of 2022. So when you look at the $7.4 million cash that we had at 30th June, it's actually an outstanding result that reflects the company's ability to retain a strong cash position while returning significant dividends to shareholders and reinvesting capital back into the growth of the business, both through accretive acquisitions of franchises and reinvesting in our organic business, which takes us on to Slide 16 and the trends in our dividend payments. Shaver Shop's Board today announced a $0.05 per share fully franked final dividend, which represents an increase of 85% over the $0.027 fully franked dividend announced this time last year. This brings our total FY 2021 dividends to $0.082 per share, up 71% on last year's dividends, which were only partially franked. If you recall, the special dividend that was paid in lieu of the interim dividend was 80% franked. Today's dividend announcement reflects the Board's decision to balance the desire to continue increasing dividend payments with the need to retain fiscal conservatism due to the ongoing trading uncertainties caused by COVID-19. The payout importantly also enables Shaver Shop to have the flexibility to invest for future growth in Shaver Shop's business. I'll now hand you back to Cameron.

Thanks, Larry. Before we get on to the trading update and outlook, I thought we should visit some of the underlying trends driving our business and the steps we are taking to increase our market share further. In terms of the underlying trends that continue to drive Shaver Shop's growth, the influence of social media is undeniable, particularly in the younger demographic with a desire to look and feel good day in and day out at constant consideration. Global suppliers like Procter & Gamble, Philips, Panasonic and ghd are also investing millions every year to bring new products and innovation to the market that deliver salons professional quality results in the comfort of people's homes. This is expected to drive the trend towards DIY beauty and personal care category even further, potentially taking market share away from salons, laser and skin care clinics. Men are increasingly becoming like women in terms of their beauty regimes, leading to a higher number of tools that they use on a daily or weekly basis for their beauty regime. And finally, with the investments we've made over the last 3 years, we are well placed to benefit from the growth in online shopping, particularly after the impact of COVID-19. We aren't just satisfied with market growth rates ever. We intend to continue securing exclusive access to as many of those new and innovative products as possible. I mentioned earlier in the presentation, 26 of our top 30 selling product lines are sold or found only at Shaver Shop last financial year. We have an even stronger competitive position in some categories like body groomers. So [ while with suppliers, you ] can provide exclusivity to Shaver Shop. Our specialty retail model has proven that with the brand recognition we now have that launching these products through our stores and websites can deliver very strong returns to suppliers as well as Shaver Shop. This, in particular, is because we train our team to be the experts in grooming and personal care, and we invest heavily in marketing and advertising to promote these product launches. We are able to educate customers about the features and benefits of each product at the right price points and make sure they walk away very confident that their Shaver Shop purchase will give them the right look or the look that they're aspiring for. We will expand into new categories with new suppliers and increase the number of owned brand products as well. This includes expanding into female categories where we may play a very small part today and in the future but where it can be a meaningful incremental contributor to our product or category range as well as our financial results. We will continue to leverage our database to further engage, inspire and delight our customers, and we'll look to selectively expand our store network where the commercial returns are compelling. This is particularly the case for New Zealand, where we hope to open 5 to 6 stores over the next 24 months, but we'll be very selective with our expansion strategy in Australia. To this end, we'll be opening new locations at Bunbury in WA and Hervey Bay, Queensland in quarter 2 of this financial year. So in summary, there are a significant number of initiatives as well as category fundamentals that we feel will underpin in Shaver Shop's long-term growth strategy, which takes me to our trading update and outlook on Slide 19. As with all retailers, we've experienced an extremely volatile trading environment over the last 8 weeks as numerous states have entered short or longer-term lockdowns. To provide some context, we have lost around 41% or a total of more than 2,800 in-store trading days since 1st of July 2021. This compared to only the loss around 10% of the available trading days to lockdowns over the equivalent period last year. And as we looked through earlier and talked through earlier in the presentation, quarter 1 was our strongest comparative quarter in sales growth terms with July an absolute standout. So with that in mind, total year-to-date sales have declined 7.3% compared to the government stimulus supported period last year. But compared to 2 years ago, when COVID didn't exist, our total sales are up 15.8%. And if you look at our modified like-for-like sales, if stores are excluded, if they were not opened for in-store trading, sales were up 0.5% on a 1-year basis and up 28.9% compared to 2 years ago. To be clear, this number also excludes the buybacks we completed in February and the 2 stores we permanently closed in FY 2021. So it is a true like-for-like measure. As our stores are closed, customers have transitioned to Shaver Shop's online channel with sales up 52.8% on the elevated levels we experienced last financial year and 368.1% on a 2-year basis. I'll repeat that sales up 368% on a 2-year basis. The other important point to note is that as lockdowns have extended, we have seen demand patterns emerge in New South Wales and Victoria for mid to late August that are similar to the accelerating demand we experienced in hair removal categories at the start of the pandemic in early April 2020. This is not only driving our top line sales but keeping gross profit margin very healthy, well above the levels of 2 years ago but not at the abnormally high levels we saw this time last year. And where we have seen our shops reopen following government restrictions being lifted, the strength of our omnichannel approach has been evident with pleasing results so far. So in summary, we've experienced an incredibly volatile couple of months with total sales down on a 1-year basis, but well and truly up versus 2 years ago, with an increasingly positive trend as the lockdown continues in New South Wales and Victoria. Shaver Shop's annual performance remained highly reliant ever on Black Friday, Christmas and Boxing Day trading periods, which are yet to come. And so in light of all these factors, Shaver Shop force does not believe it is prudent to provide sales and profit guidance at this point of time. That concludes the formal part of today's presentation, and Larry and I will now be happy to take your questions.

[Operator Instructions] Your first question comes from [ Rodney Van Royden ] from [ Life ].

Firstly, outstanding results, gentlemen. Congratulations to you both and to the entire team.

Thank you.

Thanks, Rodney.

And there is so much to like about, the return on invested capital, 26 out of 30 top products being exclusive to Shaver Shop. But I guess the first question -- I would like to ask 2 questions, if I may, the first being, I guess, on the customer service side of it, what's most impressed you? I mean that slide -- it's great to see the NPS score is up, but is there any sort of personal stories or any anecdotes you'd like to share about customer service or customer happiness during this period?

Yes. Look, it's probably -- and I could walk a little bit here, so you might have to pull me up, Rodney. There's hundreds of stories, I mean, behind the NPS scores are actually customer comments, which I read every day, and that's customer feedback from what they're experiencing in the stores that remain open or even online. And I think the key thing that's really impressed me, Rodney, is the store manager's resilience at store level. Let's take Victoria that's gone through 6 lockdowns. Some of those individuals have been stood down multiple times. And what has just impressed me so much is when they come back, they're fully engaged. They just appreciate to be back on board, serving customers or shipping online orders from the stores that we do in the current circumstance where our bricks-and-mortar stores aren't open. So from my point of view, honestly, without doubt, it's a passion and resilience of the store teams has been absolutely incredible.

Great. I know you could expand upon it, but you'll be [ kind ] for other questions. I ask that and just tie that to, basically, the second part, which is that your success is -- although in the share price -- I know we don't talk about it much, but the share price has been performing as well this year as you have. The business is outstanding. That's brilliant. And I know that sometimes the share price is a bit delayed, whatever. But I'm sure your success is attracting a lot of competitors or imitators. Have you taken thought to that? Or do you just keep applying your winning formula as if you guys were, I guess, not alone, but you've always had competitors. But I guess -- yes, sorry, the question is more, are you seeing new and different competitors because of COVID and lockdowns because of your outstanding success, particularly online?

Yes. It's an interesting one. I think, from my point of view, having been in the last 15 years and for 10 years, I was with Gillette, Procter & Gamble, is the mix of competitors has changed, but I wouldn't necessarily say it's any more competitors today than it was 20 years ago. And that might surprise some people, but 20 years ago, department stores, Myer and David Jones were very, very strong in this category, whereas today the mix has changed a little bit. A few more online retailers. But generally, I think -- and you can see through our number of exclusive product lines, without wanting to appear complacent or arrogant in any form, I think we have a very differentiated model, how we've been able to maintain our strong relationships with suppliers, investment in staff training. And the biggest differential, I think, is our omnichannel model because the reality is when we are in a lockdown period, we benefit through the online business proposition. But the greatest period is actually, to be honest, when the lockdown ceases and then we see everybody come back to bricks and mortar. We've also experienced very positive trends when states finally reopened. So I just think our model is very well positioned and could benefit no matter how the pendulum swings, whether it's a long-term lockdown or, hopefully, the lockdown ceases and everyone comes back to the shopping centers.

Brilliant. And again, well done to you and the entire team.

Thank you. Appreciate it.

Your next question comes from [ Michael Francis ].

I've just got a question about the focus on the female category growth segment. How big an opportunity do you see that has?

Sorry, I lost you there. What was the category? Apologies.

The female category. I'm just wondering how big an opportunity do you see that as becoming.

Yes. Look, I think we're a relatively small player in that space, obviously, when we talk about skin care, skin rejuvenation products. We are very strong in hair salon. And I think the opportunity for Shaver Shop is because over 50% of our clientele are actually female who are often buying for the men. There's sort of a natural opportunity for Shaver Shop to expand our categories and really appeal to that female who is actually shopping in the store. To give context, our core business is men's grooming. That's where we're very, very dominant in. And I still see an awful lot of low-hanging fruit opportunities within that segment. So female grooming, I think, is a nice opportunity for us to expand, but the core part of our business and the core focus without doubt is still our DNA. It still men's grooming.

[Operator Instructions] Your next question comes from Shuo Yang from Microequities.

Well done on the great set of results. Just on the like-for-like trading in the new financial year in some of those states less affected by lockdowns in, say, WA, Tasmania and Northern Territory, can you just give us an idea of what that sort of looks like just to give us a picture of what it looks like when there's less disruptions to -- from store -- to the store?

Yes. Sure. I might jump in on that one, Shuo. Thanks for the congratulations on the results. It does vary by state. But that being said, we're still seeing reasonable growth across most of the states. Some of them are in slight decline. The measures that we use to analyze our like-for-like sales internally are slightly different than what was presented just given the complexity of actually excluding the stores that aren't open for retail trade that does require a lot of calculation. But if you would apply that and apply that analysis, you'd see that the like-for-like stores where the states have been opened, we see a strong rebound, as Cameron said, in like-for-like sales. So in the order of sort of mid- to high single-digit like-for-like sales growth when the stores reopened, that's what we've seen historically.

Okay. So those states less affected by lockdowns, they're delivering positive like-for-likes?

Yes. That's right. That's why for the -- I guess, the periods ending the 27th of August, we're up 0.5% on like-for-like terms. Now that does include some stores like in regional Victoria and those types of things where they are open, but there's still restrictions. So there have been periods when those stores have been able to trade. But obviously, with some of the concerns around COVID, for example, here in Victoria, despite the stores being open, foot traffic is well down, and that's having an impact on those overall like-for-like results. So it's positive. In those states where there isn't the same sort of concerns, Queensland, WA, Tasmania, we're not -- we're seeing better like-for-like growth rates versus the overall number than -- that's 0.5% year-to-date.

Yes. Understood. That's clear. Just a second question on the marketing spend. How are you sort of looking to manage that going forward as stores go in and out of lockdowns? I guess second half was quite low as a percentage of revenues. I just wanted to some guidance on that if possible.

I might jump in there and then, Cameron, if you want to add in on the end. So for marketing spend going forward, we don't see any meaningful incremental spend that's required year-on-year, even if the stores reopen. A lot of our spend in marketing transitioned away from your more traditional catalog and print spend into the digital area. We still have a reasonable amount of TV advertising as well. And so as we look forward, I don't expect that mix to change much more, and I don't expect the level of overall marketing spend across the business to need to increase materially either. We've been pretty successful in the transition towards digital over the last 24 months or so certainly since COVID hit. And I think that will continue with that strong trend that we've had over the last 18 months or so going forward. Would you want to add anything on to that, Cameron?

No, I think it's pretty accurate, Larry. Probably the only thing maybe to mention is within the TVC mix, we have moved a fair bit of our spend towards free-to-air [ channel with ] ESPN. We think that's just a natural synergy for the brand and particularly tapping into the young millennial men having associations with sports like UFC, NBA as well that's proven pretty successful for us over the last sort of 9 months. So we're extending that partnership with ESPN.

Okay. Understood. Last question for me. Just on the gross margins year-to-date, you mentioned it's slightly down in FY '21, but higher than the year prior. Can you just give us the pluses and minuses on gross margin expectations, I guess, knowing your stock level still, I think, remains below your optimal levels and then there's also [ even the ] coming in and out of lockdowns.

Sure. So over the long term, the Shaver Shop gross margins have averaged in the order of 42% to 43% sort of right in the middle there, around 42.5%. Over the long term, we probably expect it to revert to that. But certainly, what we're seeing today is with the category mix that's coming through, particularly in the areas like we mentioned, like haircutting, which has been very strong for us again over the first 8 weeks, that there's probably a little bit of an upside risk to that long-term historical average gross profit margin. Obviously, the only caveat that we need to put on that is Christmas and Boxing Day and Black Friday trading, obviously, still remains absolutely crucial to our annual results. So until we get through that, it's difficult to predict exactly where our gross profit margins are going to end for the half and for the full year. But certainly, what we're seeing today is a trend towards the upside versus the long-term historical average gross profit margins.

Has there been any change to the length and depth of discounting this year versus previous years?

No, not...

Sorry, go ahead, Cameron.

Not really. I mean it's a pretty consistent sort of promotional programs. But what you did see in July last year, which I think we called out was we had an exceptional sales month and also gross profit margin month. And that was partly due to product mix over that period of time. So from -- in terms of generally though, our promotional program, our sort of go-to-market strategy is no more or less aggressive than what we've historically done.

Your next question comes from [ Damien Hector ].