Every stock has its ups and downs and right now this stock that was a punters favourite has taken a beating. The question is now if this stock will regain its market momentum with plans afoot to raise it back to its former glory.
The Reject Shop is an Australian discount variety store chain. Founded in 1981 as a "seconds" store in South Yarra, the company currently operates over 340 stores Australia-wide.
Reject shop current price: 4.00 AUD
Reject Shop Ltd – ASX: TRS – Aug 24, 4:10 PM GMT+10
Reject shop price range at 25 August 2016: $11.68 (1 year ago)
The Reject Shop blames poor product placement for $12 million profit decline in revenue. Bu that is not only the trouble brewing in the retail sector for smaller players. There has been many new players entering and expanding into Australia including ALDI and now Amazon who is poised to enter and expand into Australia.
The world’s largest online retailer is coming to Australia and competition is not only going to be tough for Reject shop but also for Grocery shops Woolworths and COLES.
The discount chain’s net profit dropped 28 per cent to $12.3 million in the year to July 2, it announced on Wednesday.
The Managing director Ross Sudano told investors, shoppers struggled to find the branded goods in their shops as they were not placed prominently enough in stores. Instead of being displayed in prime positions, these items — key to the company’s merchandise strategy — were hidden away inside, a missed opportunity to draw customers inside.
Currently tough market conditions and discount stores like Kmart and Target — owned by Wesfarmers Ltd (ASX: WES) — and Big W — owned by Woolworths Limited (ASX: WOW) — are being very aggressive on price and strategy with redesign of stores and structure for growth.
The Reject Shop’s turnaround plan is focused on a return to basics, with a focus on everyday items at good prices, and branded bargains.
There is still an upside if Reject shops manage to clean up their act and regain market share.
Currently their price is more than halved from prior top price on the asx. Is now a good time to get into Reject shop? You decide!
This article contains general investment advice only (under AFSL 400691)