Shaver Shop hit by $327k daigou fraud
Shaver Shop has revealed it was defrauded $327,000 by a store manager who sold stock through daigou channels at prices significantly below cost.
In its annual report released on Thursday, the grooming and beauty products specialist said it had been defrauded by the former store manager in the second half of the 2017/18 financial year.
"Whilst Shaver Shop's financial controls were in place and operating effectively, the manager falsified transactional records to conceal the fraudulent activity," the report said.
The manager sold stock to daigou - shoppers who buy local products to sell to clients in China - at prices "significantly below Shaver Shop's cost of goods".
An external investigation was undertaken and further controls have been implemented to mitigate future risk, Shaver Shop said.
The fraud contributed to a 27 per cent drop in the company's full-year profit to $6.6 million, driving shares nearly 22 per cent lower.
Normalised earnings for the 12 months to June 30 declined $1.7 million to $13.2 million - largely due to a drop-off in daigou shoppers - and total like-for-like sales were down 3.4 per cent on the previous financial year.
The company was also hurt by the liquidation of two suppliers, at a cost of about $491,000.
Revenue, however, was up 8.7 per cent to $154.9 million, with a stronger performance in the second half of the financial year.
"While we are disappointed at the decline in earnings over FY18, I am very proud of the efforts from our corporate store and support office teams in returning the business to underlying like-for-like sales growth of 2.9 per cent in the second half," CEO Cameron Fox said in a statement.
The company also reported a 47 per cent jump in online sales, which represents about 10 per cent of total sales.
Shaver Shop declared a final dividend of 2.4 cents a share, fully franked.
For 2018/19, the company is guiding for sales in the $160-$170 million range, while normalised earnings are expected to be between $12 million and $14.5 million.
At 1440 AEST, Shaver Shop shares were down 21.7 per cent at 45 cents.
SHAVER SHOP PROFIT HIT BY FRAUD, DROP IN SALES:
* Net profit down 27pct to $6.6m
* Revenue up 8.7pct to $154.9m
* Fully-franked final dividend of 2.4 cents per share, unchanged.
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