TRS has certainly had its ups and downs. Its SP is now at 2006...

TRS has certainly had its ups and downs. Its SP is now at 2006 levels – pretty ordinary if you ask me.

Bricks and mortar retail sucks – and in this internet age I do not see much up side for most retailers (Myer, David Jones Billabong etc). TRS is the only retail stock I hold and I have a 4 to 6 year time frame. The product offering of TRS is the stuff you would not buy over the internet given its low price point and eclectic nature (you would spend more money in postage than the purchase price). The average consumer would also be from the lower end of the wealth spectrum – less brand and image conscious. They have shown a market exists for what they sell – its leveraging and growing the business that is the hard bit.

I like the fact they have a very manageable debt which means therefore they not captive to bankers if we go through another GFC. Offset against that is the margin squeeze they are experiencing with the falling Australian dollar. My recent purchase has been at $8.40 so there is nothing worse tossing away 15% in two months. I start to get nervous when I drop 20% so I am pretty keen for this to stay above $7.00. With a PE ratio of just over 10 against a sector average of 14 it gives me confidence this has been oversold. But as they say there is no certainties in this game. Most important to me is their return on equity has historically been very high – they are now down to c16% which is still ok but no where what it used to be (c40%). So I guess I am holding out they will return to those levels. Time will tell I guess.

When the December half year numbers come out I will review my position.