The Reject Shop Limited (TRS)

By Jason Fittler

TRS is a discount variety retailer of general merchandise products.

In FY2013, TRS has around 276 stores in its total network focusing on low price points, convenient store locations offering a variety of merchandise.

TRS offers a variety of general consumer merchandise, with particular focus on everyday needs and lifestyle and seasonal merchandise.  

TRS stores are spread across Australia and headquartered in Kensington, Victoria.

TRS operates medium-sized, standardized store formats located in high customer traffic shopping centers.

The company focuses on supplying low cost basic products with limited exposure to fast-changing consumer tastes.

The merchandise is a combination of branded and national brand name products, end-of-line merchandise and parallel imported products.

TRS provided a disappointing trading update, announcing that it is unlikely to meet its net profit after tax, or NPAT, guidance for fiscal 2014 of between AUD 17 million and AUD 18 million. 

The company now expects to report fiscal 2014 NPAT of between AUD 14.5 million and AUD 15.5 million.

Despite a tough retail environment since Christmas 2013, and flat sales performance to the end of April, the company remained cautiously optimistic previous guidance would be met.

However, trading conditions deteriorated during May, which was attributable to a drop-off in consumer confidence post the federal budget and unseasonably warm weather leading to weaker sales of winter-related ranges.

The revised guidance includes the impact of costs associated with opening 13 new stores in the second half, and asset write-downs of three underperforming stores and three stores that are being closed.

The Reject Shop confirmed the new Perth distribution centre, which is scheduled to open in late July, is on time and on budget.

The company also stated it expects to make an announcement on the appointment of a new CEO in the near future.

The company share price has fallen from $17 down to $8.50 since February this year, which is a 50% drop.

At the current price it has a gross yield of 6%.

Although it is starting to look to be in the value range we still need to make sure that the company is fundamentally sound.

For more information about The Reject Shop Limited (TRS)  please contact us on 07 4771 4577.