Shriro Shares Slump, Appliance Sales Impacted By Margin Pressure

Shares in Sydney based appliance distributor Shriro have slumped 11.4% after the Company announced a projected 15% slump in revenues.

The Company that has relied on Co-Op marketing and retailers to primarily promote their brands is now having to compete in a changing retail environment for appliances claims analysts.

Several appliance suppliers have told ChannelNews that several major retailers are currently reviewing their ranging and that several key brands, including house brands face being dropped as retailers move to a model of trying initiate a “Sell More from less brands” strategy.

The focus appears to be on brands who invest in brand marketing both with and outside of the retailer as well as European appliance brands.

During the past four months, Shriro who listed in 2015, claims that business has been “subdued” and that pricing battles between appliance brands has been “intense”.

Shriro sales of kitchen appliances between January and April are down 11% on the corresponding period last year and “some margin compression is evident” the Company claims.

Sales of Casio products spanning watches are up also contributing to growth are overseas sales of ‘Everdure by Heston Blumenthal barbeques’.

In a statement issued to the ASX a Company spokesperson said, “As previously foreshadowed, a number of marketing costs associated with ‘Everdure by Heston Blumenthal’ barbeques and other longer term product initiatives have been incurred and will continue through the remainder of the year”.

The Company claimed that there ‘are encouraging early signs that market acceptance of the new barbeques in USA is strong and that possibly increased shipments will be made prior to the end of this calendar year, assisted by the marketing initiatives underway and planned.

They added “As a result, trading EBITDA for the six months to June is likely to be down around 15% compared with the previous year”.

The Company claims that the Australian appliance market conditions remain challenging compared to 2017.

They claim that multi-dwelling developments are slowing, and single dwellings developments are expected to be flat.

The Company said that because of retailer margin compression due to online competition, sales at Shriro are facing tough competition going forward, as a result Shriro is undertaking a range refresh in Omega and Blanco to adapt to market conditions.

Shawn Clarke an analyst at Simply Wall Street said prior to the downturn announcement ” In the last couple of years, Shriro Holdings grew its bottom line faster than revenue by efficiently controlling its costs”.

“This has caused a margin expansion and profitability over time. Scanning growth from a sector-level, the Australian consumer durables industry has been relatively flat in terms of earnings growth over the previous few years. This means that whatever near-term headwind the industry is facing, Shriro Holdings is relatively better-cushioned than its peers”.