Insights

Why the Reject Shop (ASX:TRS) share price is getting hammered

This discount retailer is doing it tough right now…
The post Why the Reject Shop (ASX:TRS) share price is getting hammered appeared first on The Motley Fool Australia. –

The Reject Shop Ltd (ASX: TRS) share price has come under significant pressure today following the release of a trading update.

At the time of writing, the discount retailer’s shares are down 15% to $5.37.

What did Reject Shop announce?

Reject Shop began by reminding the market that in February it warned that its sales were being impacted in the second half due to the Brisbane, Perth and Victoria lockdowns, COVID-19 concerns in New South Wales, and changing State border restrictions.

It also noted that its stores in CBD locations and large shopping centres continued to be negatively impacted by reduced footfall and that it was facing ongoing challenges in the international supply chain. That latter was expected to result in increased costs during the second half.

What’s the latest?

Unfortunately, since that update, trading activity has continued to be challenging.

Management advised that its stores in CBD locations and large shopping centres, typically in metropolitan areas, continue to trade well below pre COVID-19 levels.

As a result, preliminary and unaudited comparable sales for the 48 weeks ended 30 May 2021 were down 1.4% compared to the comparable period in FY 2019. This comprises a 12% decline in comparable sales at CBD locations and large shopping centres and a 0.9% lift in the remainder of its portfolio.

In addition, the company continues to incur materially increased supply chain costs, particularly higher international shipping costs, as well as costs associated with holding inventory due to international shipping delays.

Guidance

Although the company is aiming to offset the above through a reduction in costs, it isn’t going to be enough to stop Reject Shop from reporting a second half loss.

As a result, management expects full year sales of between $776 million and $778 million and earnings before interest and tax (EBIT) of $8 million to $10 million.

While the latter is higher than FY 2020’s EBIT, it is down markedly from its first half EBIT of $23.3 million.

The post Why the Reject Shop (ASX:TRS) share price is getting hammered appeared first on The 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!