More excuse, same promises to do better and further disappointments by TRS
- Worst result since listing
- Still no signs of Chairman making ways for new people
- Breach of Fixed Charge covenant is very serious. I can't see any prospects of this being rectified quickly in the near future
- Bloated board of directors that is way over-remunerated
- Shouldn't have paid interim dividend 2019, when business is clearly struggling
- Terrible operating cash flows
- Poor merchandising decision, leading to an increase in inventory even when overall sales is down.
- Distribution centre investment has to be written down after just less than 2 years since commission.
Unfortunately, TRS is a retailer whose success/failure depends on the nimbleness of the people in charge of the buying department in sourcing the right merchandise at the right price that can resonate with consumers:
- The everyday goods sold at very competitive prices by TRS are used to attract customers into the stores. They don't usually have a lot of margins in it.
- TRS wants customers to buy other things whilst in store, especially those seasonal merchandise, such as winter blankets, christmas lights, etc, which usually have higher margins.
The needs to have the right stocks in store at the right price at the right time makes TRS subject to a volatile earnings volatility:
- Have the right stocks, at the wrong price point, or slightly late in store, and you are stuffed.
- Have the wrong stocks, at the right price point, at the wrong time, and you are stuffed.
- Have the right stock, at the right price point, but the shipping was delayed due to bad weather, and you are stuffed.
And once TRS misses the selling window, it has no choice but to liquidate the stocks at all costs, usually at a loss, to make way for new merchandise to go into the store for the following selling seasons.
On top of all of these, TRS is still subject to the whims of landlords, fickle consumer sentiments and very aggressive competitors.
TRS' main competitors include:
- Discount department stores, e.g. Kmart, Big W, Target, Best & Less...
- Various independent $2 shops
- Major supermarkets, Woolworths, Coles, IGA and Aldi
- Overseas discounters: Daiso, Miniso...
And I can't see the competitive landscape becoming less intensive in the foreseeable future. This makes TRS' life very precarious....
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