TRS Peers

I've done some work on TRS global peers, summarised in the table below. My key takeaways are:

- Discount variety remains a thriving category in offshore markets. If you want evidence, do some research into Dollarama in Canada (and TRS has growth potential more akin to Dollarama than the US peers);
- Weak EBITDA margins in Aust are being driven by high lease costs. Accordingly, TRS's strategy to move away from large shopping centres should help, but high rents are (at least for now) a fact of operating in Aust;
- High lease costs exacerbate the high operating leverage of TRS. It is both the reason that the share price is where it is (i.e. if the -4% comps continue, fixed charge cover will quickly head towards 1x), but it also provides substantial upside.
- The importance of getting the new DC running smoothly shouldn't be underestimated. The CFO says it is on track, so lets hope for a similar update on that at the FY
- Any company can go broke if you extrapolate bad news indefinitely, but I think there are too many loyal customers for TRS, which remains the clear segment leader in an industry that I think has good long term prospects (despite the headlines on retailing generally). The consumer is weak, but this will pass, and a discount variety retailer is not the worst place to be in a weak operating environment.

	Column 1	Column 2	Column 3	Column 4	Column 5
0		TRS	Dollar Tree	Dollar General	Dollarama
1		AUD	USD	USD	CAD
2		2017F	2017F	2017F	2017F
3	Rev	786	22121	22331	3027
4	Gross Margin	43%	37%	31%	49%
5	EBITDA	39	2589	2449	716
6	EBITDA margin	5%	12%	11%	24%
7	NPAT	13	1010	1235	457
8
9	Mkt Cap	113	16106	19579	14178
10	Net debt	6	4573	2827	1391
11	EV	119	20679	22406	15569
12
13	EV/EBITDA	3.04	7.99	9.15	21.74
14	P/E	9.06	15.95	15.85	31.02
15	EV/Revenue	0.15	0.93	1.00	5.14