Insights

Reject Shop (ASX:TRS) share price tumbles but its property stocks that should be worried

We are seeing a reversal of fortunes today with the Reject Shop Ltd (ASX: TRS) share price crashing and shopping mall stocks rally.
The post Reject Shop (ASX:TRS) share price tumbles but its property stocks that should be worried appeared first on Motley Fool Australia. –

rubber stamp stamping 'rejected' on paper representing falling reject shop share price

We are seeing a reversal of fortunes today with the Reject Shop Ltd (ASX: TRS) share price crashing and shopping mall stocks rally.

The Reject Shop share price tumbled 8.3% to $6.49 in the last hour of trade as the discount retailer held its annual general meeting.

But comments from its chief executive Andre Reich should send shivers down the spines of retail property stocks instead.

Reject Shop share price vs. ASX shopping centre stocks

He warned that the retailer planned to renegotiate rents for more than 60% of its stores over the next two years, reported the Australian Financial Review.

This didn’t faze mall owners. The Vicinity Centres (ASX: VCX) share price jumped 2.3% to $1.36, the Scentre Group (ASX: SCG) share price gained 2.9% to $2.30 and the Mirvac Group (ASX: MGR) share price added 2% to $2.28 at the time of writing.

But the turn in share prices today is only a blip. The TRS share price has surged 90% since the start of this calendar year, while ASX shopping centre stocks have crashed by between 16% and 40%.

Reject Shop throws down the gauntlet

Mr Reich is threatening to play hard ball. He will not hesitate to close stores if he can’t get what he wants, particularly shops in larger shopping centres.

This is because stores in neighbourhood centres and strip malls have outperformed those in the big malls and CBD locations.

This is probably the result of COVID‐19 restrictions where foot traffic in large malls and city centres have tumbled.

Cutting its way to growth

While Reject Shop is threatening to close stores on the one hand, it’s on the lookout to open new ones in lower cost locations.

It’s also trying to develop its online shopping portal to capitalise on the structural change in the way consumers shop.

Driving cost down is a key priority for the retailer as it’s on the first phase of its turnaround strategy. The key goal is to stop the slide in earnings and expand earnings before interest and tax (EBIT) margins to 5% from 0.6% that it posted in 2020.

Mr Reich is also looking to reduce range of items sold in stores by as much as 75% to simplify operations, cut costs and increase buying power.

Could supermarkets follow Reject Shop’s lead?

To better capitalise on the post-COVID world, Reject Shop will focus on everyday essentials such as detergent, package foods and pet products.

These items are in hot demand as consumers spend more time at home. Just ask Woolworths Group Ltd (ASX: WOW) and Coles Group Ltd (ASX: COL).

Speaking of which, I am sure the giant supermarkets are also thinking of ways to cut their leasing costs for much the same reason as Reject Shop.

These Dividend Stocks Could Be Your Next Cash Kings (FREE REPORT)

Motley Fool Australia’s Dividend experts recently released a brand-new FREE report revealing 3 dividend stocks with JUICY franked dividends that could keep paying you meaty dividends for years to come.

Our team of investors think these 3 dividend stocks should be a ‘must consider’ for any savvy dividend investor. But more importantly, could potentially make Australian investors a heap of passive income.

Don’t miss out! Simply click the link below to grab your free copy and discover these 3 high conviction stocks now.

Click Here For Your Free Stock Report

Returns As of 6th October 2020

More reading

Motley Fool contributor Brendon Lau owns shares of Woolworths Limited. Connect with me on Twitter @brenlau.

The Motley Fool Australia owns shares of COLESGROUP DEF SET and Woolworths Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Reject Shop (ASX:TRS) share price tumbles but its property stocks that should be worried appeared first on Motley Fool Australia.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Share on facebook
Share on twitter
Share on linkedin

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;


To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.


An active and funded account with a positive trading balance is required to continue to have access to the tools;


Although the tools are available to you indefinitely, Monex Securities may at it’s discretion disable access to the tools in the future;


Monex securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

Important Notice
iOS & Android App - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US Trades. Click Here!