The Reject Shop Accepted

Shares in small retailer, The Reject Shop (TRS) hit a record yesterday on the back of another solid result and expectations of more to come.

They jumped 47c to $10.47, topping the previous high of $10.15.

The retailer lifted its annual profit forecast after posting an 18.1 per cent lift in first half earnings to $10.2 million compared to its $8.7 million result in the previous corresponding period.

Sales rose 17.1 per cent to $149.5 million on a headline basis, and on a same store basis, were up an equally solid 7.8 per cent, thanks, it said, to strong Christmas trading and the opening of 11 new stores. TRS now has 116 outlets around the country.

Shareholders have been rewarded with a 30.8 per cent lift in interim dividend to 17c, fully franked.

In a statement to the ASX, TRS said “The company (has) upgraded its full year earnings forecast from an initial forecast range of $10.7 million to $10.9 million to a range between $11 million to $11.2 million.”

That means the new guidance is around three per cent above the previous estimate and pits the 2007 earnings growth figure in the range of a 21.5 per cent to 23.7 per cent rise on the 2006 profit.

Chairman Brian Mr Beattie said former Coles and Bi-Lo supermarkets head Gerry Masters, who has been appointed to replace current managing director Barry Saunders, would join the company on at the start of next month and takeover “no later than July 1”.

Mr Saunders, who is stepping down after seven years in the job and really position the company, said “We plan to add 11 further stores during the second half bringing the annual total to over 20, and by year end total store numbers are projected to be at least 130.”

The company said the accelerated pace of second half store openings was not expected to contribute to net profit this financial year, but they and the new distribution centre would place the group in “a very strong position for FY2008 (fiscal 2008).”

“Further ranging, stock flow and stock allocation initiatives are also on the agenda to maintain strong growth in sales and gross profit dollars and further improve stock turns.

“As good as the first half merchandising result was we still see scope for substantial improvement on our recent efforts. We are also working on further development of our longer term logistics and IT strategies.

The retailer says it expects to make further progress in its newest markets, Queensland and Western Australia.

About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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