A respectful and thoughtful argument! Hats off to you Mr.Dollar. As an investor, we always need to look at the bear story and opinions that disagree with your own to find out where you can be wrong, so thank you.
I beg to differ with you regarding your analysis of the retail sector with consumer discretionary up 36% for the quarter even outpacing materials +34%. Even the perennial dog Myer has managed to double from March lows. With the financial Jopkeeper/Seeker cliff pushed albeit it in a reduced form these tailwinds should continue to blow at least for the next six months. Consumers are upping their retail spending as they are no longer taking lavish holidays. This was mentioned by the Nick Scali CEO on the FY20 call as one of the key reasons for their 40-50% increase in profit. People are also not eating out as much as concerns of Covid-19 keep them home. This has resulted in many consumer discretionary businesses being run off their feet as consumers bringing their spending home. I admit this may not be directly applicable to the reject shop, it is more a comment on discretionary spending as a whole.
I do admit the lack of online for the reject shop is a disadvantage. Hopefully, they can remedy this situation and we can add this to a growing list of factors that could rerate the stock. Recently when signing up to their newsletter they asked for my residential address "to provide speedy delivery". I doubt short term whether they will be adding this capability but at least they are building it into their website systems! Dollar General in the USA is incredibly successful with online delivery so at least we know the model can work. The new CEO did visit Dollar General before taking the reigns. Mind you so did his predecessor.
In breaking news, this morning another blue-chip highly successful Fund Manager Eley Griffiths has added TRS to their portfolio. The fund manager positions are building...
https://www.livewiremarkets.com/wires/4-new-additions-to-our-portfolioAfter a lengthy spell, we returned to The Reject Shop (TRS) register. An executive overhaul, equity raising and plan to rework the business model attracted us to this one-time retail darling. Key areas of focus in this redux involve a) striking the appropriate rent and wages per sales ratio’s, b) SKU rationalization and supply chain review, c) renegotiation of store leases (average 2-year tenor), d) IT investment and e) where practicable, ‘borrowing’ from the highly successful US-based Dollar General Corp model. A thoughtful store rollout should logically follow.
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