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  1. #1
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    Default The Reject Shop (TRS) - almost hit $15

    The Reject Shop (TRS)

    Operations
    � Operates discount variety store chain called �The Reject Shop� Also operates �E $2 stores� but these are gradually being replaced by �The Reject Shop� formatted stores, which are more profitable. TRS closely follows trends in the USA.
    � The Warehouse Australia and Millers report margin deterioration from intensed competition. TRS reports no such pressures, and has instead increased its margins.

    2004 Results
    � Sales of $180.6m, up 10.2%
    � Record NPAT of $5.6m up 20.9%. EBITDA of $11.9 million, EBIT of $8.8 million.

    Fundamentals:
    � TRS recently listed on the ASX at $1.80. Has been in an uptrend since that time, hitting a high of $2.75, but has since retraced to $2.60-ish.
    � Market capitalization = circa $60 million
    � Price/Earnings = 11; Price/Sales = 0.33; Yield = 6% (forecast), EBIT multiple of 7. These ratios indicate good value.
    � Robust balance sheet, net debt is decreasing and the inventory is clean (nos stale or old inventory). Net debt at June 30 was only $1.7 million. Combined with high Free Cash Flows, negligble risk of company going bankrupt.
    � Insider purchase Friday 26 November, but shareholders sold down their holding during the IPO.

    Future Outlook
    � Forecast NPAT of $6.0-$6.2 million. Dividend at 60% of NPAT.
    � Forecast Free Cash Flow for FY2005 = $4.6 million. This will be used for further expansion, reducing the modest debt burden and payment of a healthy dividend without the need to raise capital from investors.
    � Will continue store rollout plan of 8-10 stores per annum (from a current base of 103). �The early sales of our Pacific Fair store, our first in Queensland, were particularly pleasing.�
    � �In the first quarter of FY 2005, sales have exceeded our budgets and we are confident of a strong first half result that will position us well to deliver on our full year profit outlook. �

    Overall, looks like the company is expanding revenue at 10% per annum and profits at 20% pa.

    I do NOT hold any TRS shares at present. The company looks interesting, but not living in Ozzie I'm not sure what their competitive position is. Why does one go to a "Reject Shop" and not a Millers or Crazy Clints? What is TRS's competitive advantage? What market share does TRS have and how much potential for expansion is there? What is the brand profile of "The Reject Shop"?

    PS: Thanks to Tommy and DavidRob for mentioning this in the HWW thread. Thought TRS deserves some dedicated attention, discussion and analysis.

  2. #2
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    Default

    Howdee One-Up,

    Re: TRS:

    Bit Busy at Present To Elaborate much further....

    ....>>>...But as I said before on another Thread...IMO...The Reject Shop(TRS) should NOT be Rejected !! [8D]

    So Then One-Up:....Yep, for sure:..>>>(TRS) The Reject Shop Is a Goodie. -IMO- []

    And comparisons with Millers and The Warehouse Shop; are, for a host of reasons, are --IMO-- quite misguided and erroneous...

    Regards,
    Robbo
    Robbo

  3. #3
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    Default

    Thanks for the reply Robbo

    On Lynch criteria, with a name like "The Reject Shop" NOT the sort of company one would brag about owning at a cocktail party [:I]

  4. #4
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    Default

    Not much feedback or interest in this one.

    TRS opened today at $2.85, up another 3%. Has been a steep climb the last few days. I notice that TRS encountered some resistance around the $2.80 mark a few months ago, so maybe this is a good sign? Interested in the opinion of chartists?

    DISC: have now taken a full position in TRS, so I guess that makes me a reject

  5. #5
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    Default

    Hi All TRS holders,

    Half-year results out, lovely

    Announcement:
    http://stocknessmonster.com/news-ite...E=ASX&N=232122

    Presentation:
    http://stocknessmonster.com/news-ite...E=ASX&N=232126
    __________________


    16 February 2005
    Half year profit up 22.5%; Full year profit forecast upgraded
    Highlights: Sales, $111.8 million, up 12.8 %


    Comparable store sales growth 5.9%
    NPAT $7.5 million, up 22.5%
    Six new stores opened in the period
    Full year forecast increased to $6.5-$6.7 million
    Interim dividend 10 cents per share

    Summary:
    HY2005 HY2004
    $ Million $ Million
    Sales 111.8 99.1
    EBITDA 12.6 10.7
    EBIT 11.0 9.2
    NPAT 7.5 6.1

    The Chairman of The Reject Shop Limited, Mr Brian Beattie, today announced on behalf of the Board a 22.5% increase in net profit after tax (NPAT) to $7.5 million for the six months to 26 December 2004.

    The profit was earned on total sales of $111.8 million, an increase of 12.8% on the previous corresponding period. Sales growth was underpinned by strong comparable store sales growth of 5.9% and six new store openings during the period.

    The Directors have declared a fully franked interim dividend of 10 cents per share to be paid 23 March 2005. The record date is 4 March 2005.

    Following its strong first half trading performance the Company has increased NPAT expectations for the full year ending 26 June 2005 from an initial forecast range of $6.0m - $6.2m to a range of between $6.5m - $6.7m.

    The strong sales and improved gross margin performance provided the Company with the opportunity to accelerate initiatives designed to sustain long term growth and this led to some additional costs in the half. These initiatives included the strengthening of the buying capability with new expertise and technology, the introduction of cost effective technology into stores to improve productivity, the replacement of some Everything Here $2 stores with The Reject Shop stores and relocating some existing stores to improved locations.

    The Reject Shop Managing Director, Mr Barry Saunders said he was pleased with the first half result, particularly the strong comparable stores growth and a sound performance by new stores opened during the period.

    THE REJECT SHOP LIMITED

    Appendix 4D Page 3
    “Improved gross margins have been achieved through a combination of strong sales in some of the higher margin
    product categories, improved information from the data warehouse enabling better item quantification and fewer
    markdowns and a favourable impact from the strength of the Australian dollar.”
    “We are focused on investing in the future growth of the business and to this end have made considerable progress strengthening the buying team. While this will lead to additional costs in the second half, I believe this capability is central to long term growth. A larger more experienced and better equipped buying team has the potential to drive future sales and profit growth.”
    “We are evaluating our overall logistics facilities and the possibility exists to introduce new technology and relocate the distribution centre to improve productivity and cater for future growth.”
    “In the first half we opened six new stores and are planning a further six stores for the second half, including some Queensland opportunities. We also remain committed to improving productivity in stores by progressively rolling out radio frequency technology as well as computer assisted store ordering” he said.

    Further information can be obtained from the Company’s website at www.rejectshop.com.au

    Barry Saunders Chris Bryce Graham Lever
    Managing Director Chief Financial Officer Company Secretary
    Office: (03) 9371 5500 Office: (03) 9371 5552 Office: (03) 9371 5531

    Fowlstone Communications
    Geoff Fowlstone Lindsay Muir
    Office: (02) 9955 9899 Office: (02) 9955 9899
    Mobile: 0413 746 949 Mobile: 0400 320 540
    Email: geoff@fowlstone.com.au Email: lindsay@fowlstone.com.au
    ends
    Respect
    TOMMY

    Disclosure: trading in and out of many stocks, too many to update the list at the moment...

    DO NOT TRUST ANYTHING I SAY OR IMPLY... USE YOUR OWN BRAIN AND RESEARCH BEFORE MAKING ANY INVESTMENT DECISIONS.

  6. #6
    Speedy Az winner69's Avatar
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    Default

    Over 300 now

    Remember the pundits putting this down when it couldn't even maintain its $2 tag after the IPO ... closing down on first ... rejected they said

    Makes you wonder though about the competitors performance seeing TRS doing so well

    Presume you are doing well with this oneup
    “ At the top of every bubble, everyone is convinced it's not yet a bubble.”

  7. #7
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    Hi winner69,

    Those who bought under $2 would be laughing now though eh...

    Hoping that this would remain above $3 from here onwards, PE is still low and big instos seem to continue topping this one up on a regular basis. Hope more will follow[]

    I've been holding since Aug, it's not an exciting trading stock for whopping short term gains but seems like a slow & steady investment play for medium/long term holders.
    Respect
    TOMMY

    Disclosure: trading in and out of many stocks, too many to update the list at the moment...

    DO NOT TRUST ANYTHING I SAY OR IMPLY... USE YOUR OWN BRAIN AND RESEARCH BEFORE MAKING ANY INVESTMENT DECISIONS.

  8. #8
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    Default

    Hello fellow rejector......

    It seems that the old TRS make losses in the second half when Christmas shopping is all over. How can't NPAT after tax fall from $7 mil plus in the fist half to under $7 mil for the year. This mean TRS operate in 2 halfs. They might as well closed shop from JAN to JUNE and open up big in June to Dec. I know they can't do that.

    I don't see them any different to Crazy Clark or Makro Warehouse.
    However I don't think we have The Reject Shop in WA yet.


  9. #9
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    Hi all TRS holders,

    Wow, up 7.28% today on no news[]

    Soulman... understand what you mean by "they might as well closed shop from JAN to JUNE and open up big in June to Dec" hahaha, shame they can't do it!
    Respect
    TOMMY

    Disclosure: trading in and out of many stocks, too many to update the list at the moment...

    DO NOT TRUST ANYTHING I SAY OR IMPLY... USE YOUR OWN BRAIN AND RESEARCH BEFORE MAKING ANY INVESTMENT DECISIONS.

  10. #10
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    As you know Tommy,

    One of my real TRS is one of my TRUE faves....and my Research tells me, that things are quite definitely on The UP and the UP....for TRS...for a multitude of reasons...haven't quite got time to elaborate right now.....

    TRS do have demonstrated Great skill in Stock Inventory turnover AND with these Guys, their Store Branding is First Class---IMO....their Store Offering is a class act and their focussed......and much more Goodies besides..[^][^][^]


    Great Going heh...[]

    By the way, I gather Tommy your Stock portfolio must be starting to look quite relatively HEALTHY by now mate, are you happy with how things are generally travelling !! ???

    Keep Holding TRS..of course only IMO....do your research etc etc.... !![][]

    Kind Regards Tommy and all other Rejectors...

    Happilly rejected Robbo
    Robbo

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