Unfortunately for its shareholders, the Shaver Shop Group Ltd (ASX: SSG) share price has been thoroughly beaten down in morning trade.
At the time of writing the specialty retailer's shares are down a whopping 32% to 42.5 cents.
Why have its shares been crushed today?
This morning Shaver Shop provided the market with a trading update. As you might have guessed from the share price decline, it wasn't a positive one.
According to the release, management expects FY 2018 EBITDA to be in the range of $13 million to $15 million.
This compares to the pro forma EBITDA of $14.9 million it delivered in FY 2017 and comes despite same-store sales growth coming in at 11.9% for the first 12 weeks of the new financial year.
As I mentioned in August, the company has been hit by supply issues for key products sold through its multi-unit reseller channel, also known as the daigou.
This is expected to cause its same-store sales to moderate over the remainder of FY 2018.
Should you buy the dip?
Whilst it is unclear what exactly the supply issues are for the daigou resellers, I think any business reliant on selling products to be then resold in China is playing with fire.
This has been seen time and time again, most recently with Bellamy's Australia Ltd (ASX: BAL).
So with this channel now under pressure, it isn't at all surprising to see the company struggle for growth.
In light of this, I would suggest that investors stay clear of Shaver Shop and focus on other quality retail options such as Premier Investments Limited (ASX: PMV) and Noni B Limited (ASX: NBL).
