The Reject Shop (TRS) - almost hit $15

[robbo]

Tommy ...

Howya Tommy,

YOu were more "on the money" ---with your TRS thoughts re. Millers; and Tommy you were much MORE right than me....[B)]

It turns out, that yep, as you suggested might happen Tommy, Millers Mgt is now talking to TRS in terms of a Trade Sale---which is just a nice euphamism for "buy-out/takeover"...

Of course that might "make" Millers a good takeover target "Spec buy" ---for those wanting to risk their knicker-bockers on a Buy Out scenario --

---like I did quite nicely with Independnent Practioner Network (IPN) a few months ago....

--although I think I'll keep my trousers on at the momment...for the time being at least.... before throwing everything in..... on "this particular wheel".....-

But watching with Interest Tommy.... !!! []

Kind Regards,

Robbo

[thereslifeafter87]

Just keep that $6 billion in perspective. It sounds like it's a lot, but when viewed in the context of a $200billion industry, it equates to 3%.

Not business destroying really huh?

[tommy]

quote:Originally posted by davidrob

Tommy ...

Howya Tommy,

YOu were more "on the money" ---with your TRS thoughts re. Millers; and Tommy you were much MORE right than me....[B)]

It turns out, that yep, as you suggested might happen Tommy, Millers Mgt is now talking to TRS in terms of a Trade Sale---which is just a nice euphamism for "buy-out/takeover"...

Of course that might "make" Millers a good takeover target "Spec buy" ---for those wanting to risk their knicker-bockers on a Buy Out scenario --

---like I did quite nicely with Independnent Practioner Network (IPN) a few months ago....

--although I think I'll keep my trousers on at the momment...for the time being at least.... before throwing everything in..... on "this particular wheel".....-

But watching with Interest Tommy.... !!! []

Kind Regards,

Robbo

Hi Robbo,

Where did you get that info regarding Miller engaged in talks with Reject Shop?? Had no idea talks were already in progress!

If it is true, well, I'm sure TRS will do the right thing i.e. cherry-pick Millers' branches that are making a loss due to poor management despite being positioned in strategically favorable locations and give them a makeover, while weeding out those that need to be culled.

I have visited TRS stores in Chatswood Westfield and Macquarie Center, both appear to be doing well... don't know about other branches though! Looking forward to possible exciting announcements in the near future

[tommy]

quote:Originally posted by thereslifeafter87

Just keep that $6 billion in perspective. It sounds like it's a lot, but when viewed in the context of a $200billion industry, it equates to 3%.

Not business destroying really huh?

Hi thereslifeafter87!

Even if $6bn only accounts for 3%, the downturn was enough to force retail giants Myer and David Jones to launch their year-end sales earlier than usual, a move which has thrown the entire retail market into cut-throat competition mode... and remember that they had good reason to do so (i.e. they need to get rid of those inventories before the closing of accounts at the fiscal year end!)

3% might be peanuts for a profitable business, but it will literally be a life or death issue for those that are already bearing the brunt of increasing costs and sluggish sales.

[David Hardman]

quote:Originally posted by tommy
Where did you get that info regarding Miller engaged in talks with Reject Shop?? Had no idea talks were already in progress!

There was an article in the wekeend AFR about this prospect Tommy.

[tommy]

Thanks davehardman!

Another news article in which TRS is mentioned:

____________
http://www.thecouriermail.news.com.a...5E3122,00.html

Discount stores losing out to high-enders
Emma Chalmers
14jun05

IT is only a short walk from the diamonds and blue bags of Brisbane's first Tiffany and Co store to the glorified jumble sale of the inner city's Crazy Clark's outlet.

But even in the midst of a much talked about retail downturn, the gulf between the two stores is acute.

Last week, as the covers came off more stores in the high-end Queens Plaza, Miller's Retail sparked rumours it was ready to dump its discount variety arm, which includes Crazy Clark's, by announcing the closure of 80 stores and aggressive sales and stock markdowns to shift its excess inventory.

Miller's, which also operates Go-Lo and women's apparel chains Katies and Miller's Fashion Club, cited internal problems such as excess stock, poor store locations and an uncertain retail outlook as the primary problems facing its business.

Fierce competition in the discount sector has also hurt rival retailer The Warehouse Group, which flagged a lower profit this year after disappointing Christmas sales.

With consumer spending tipped to remain sluggish into the near future, life is not going to get any easier for the discount stores, which are also suffering from a shift in customer tastes.

According to Mel McGoldrick, program director at the Australian Centre for Retail Studies, customers are putting a lot more thought into their purchases and heading for the top end of town.

"People are not spending as much, but when they do they're making sure they get exactly what they want," she said.

"They're looking to get that really special piece and looking to treat and look after themselves."

Customers are also seeking an enjoyable shopping experience – something that is not emphasised in a discount store where price is the selling point.

These increasingly discerning buyers spell trouble for discount retailers who rely on bulk sales at cheaper prices in contrast to top shelf retailers who can better absorb a flattening market.

"The fact that they work off such low margins and such high volumes, when their volume drops off it really hurts them, whereas if you work on a much higher margin it's not such an issue," she said.

According to one analyst, these woes are compounded by many discount stores' "haphazard" approach to retailing.

David Spry from FW Holst said stock purchase and control was vital in a sector that relied on volume and Miller's had not got that formula right.

"They operate on fairly thinnish margins and of course if you haven't got the systems in place and you don't control your inventory properly you are going to get into trouble," he said.

Conversely, Mr Spry said The Reject Shop had been managed with a good format and well-positioned stores and after opening one store in Queensland on the Gold Coast, it planned to further extend its footprint in the state.

"They run a very strict business model, they're not afraid to close any stores that are not reaching benchmarks, even if they are profitable," he said.

Manjit Sadhwani, managing director of the 30-strong chain of Dollars and Sense stores in Queensland, NSW and Northern Territory, also believes he can pinpoint where the big players have come unstuck.

He said Dollars and Sense was enjoying double-digit growth in the face of flailing competitors because of the company's attention to detail.

"We're smaller and we're nimbler and it's easier for us to move with the needs of our customers," he said.

"I think once you get to a situation where these guys have, the big corporate syndrome, it's very, very difficult when you've got a large number of stores, but we can do different things in different locations."

In addition to tailor-making individual stores to different demographics, Mr Sadhwani said the company can seek out an edge on its competitors through its product range.

"Thes

[tommy]

News article mentioning a bit about TRS in connection with Millers:

_____________
http://www.theaustralian.news.com.au...55E643,00.html

Solomon Lew raids Just Group
Michael West and Katherine Jimenez
June 23, 2005

RETAIL kingpin Solomon Lew has swooped on Just Group, snaring 8.6 per cent of the troubled fashion retailer in a market raid.

One month after emerging on the share register of surf and skatewear company Globe, another Lew family company, Metrepark, was revealed as a substantial shareholder in Just Group.

Using Southern Cross Equities as broker, Metrepark, which lists Mr Lew and Kim Davis as directors, bought 18.7million shares in Just between May 17 and yesterday, at prices ranging from $1.80 to $2.13.

Like many other retail stocks, Just recently suffered a profit downgrade, blaming the slowdown in consumer spending. Mr Lew's interest is likely to put a floor under the Just share price, which tumbled to a record low of $1.80 after the mid-May downgrade.

The shares have since recovered, closing yesterday at $2.13 to value Mr Lew's stake in the group -- owner of Just Jeans, Jay Jays and Portmans -- at almost $40 million.

A source close to the former Coles Myer chairman said a desire for a "seat at the table" was the most likely explanation for the investment. He said Mr Lew might have bought the stake to position himself for a corporate play, or simply because the stock represented good value.

Mr Lew, ousted from the Coles board in late 2002, still holds a 6 per cent stake in the giant retailer, worth almost $650 million at yesterday's closing price of $9.34.

* Speculation has emerged that Miller's Retail has put its troubled discount variety business up for sale.

Miller's, which has also suffered from the consumer spending downturn, is nearly three months into a strategic review that is due to be finished soon.

Industry sources claim that the division, which has forced Miller's to make three profit warnings in the past 12 months, is being offered for sale. The division comprises the Go-Lo, Crazy Clark's and Makro chains and is estimated to be worth about $50million.

Earlier this month, Miller's wrote down the carrying value of the discount variety business to zero, a reduction of $31.1 million, "due to the uncertain outlook and continued underperformance of the discount variety division".

A company spokesman declined to comment on the sale speculation and referred to chairman Geoff Levy's statement on April 21, which said its review was "far-ranging" and included "an examination of asset valuations and consideration of the many restructuring and divestment opportunities open to the group".

The Warehouse - owned by New Zealand Warehouse Group - has previously flagged an interest in some of the stores, as has The Reject Shop.

Sources believe private equity groups could also line up as likely buyers.

The company has taken some preliminary action ahead of the review. Miller's will wear a one-off $55 million writedown this year after shifting inventory and meeting the expenses of closing 80 of its 1050 outlets around the country. Consequently, its earnings will slide into the red in the 2004-05 year.

[tommy]

http://www.bordermail.com.au/newsflo...page_id=989624

__________

Fri, Jun 24, 2005

Discounter adding variety to centre

By DI THOMAS

Ready for todays opening assistant manager Ms Kristine Ruhmann, area manager Will OCollins and Mr Pontt.

DISCOUNT variety retailer The Reject Shop will open a new store at the redeveloped Centro Lavington shopping centre this morning.

The store, the 41st in NSW, joins stores at Centro Wodonga and Dean St in Albury.

The Reject Shop managing director, Barry Saunders, said the new store had a selling area of 470sq m, employed 30 and represented an investment of $420,000.

He said over the past five years the company had offered a restricted range through its Everything Here $2 store, which was closed in October before the start of renovations.

“This opportunity now allows us to serve our customers with a wider range of bargains in a larger, more customer friendly location,” Mr Saunders said.

“We are also excited to be providing additional employment opportunities in the community.

Store manager Nigel Pontt continues a family tradition with his father Ron having operated the Everything Here $2 store.

He said preparations had gone smoothly and his staff were looking forward to opening for business from 9am.

“There is definitely a bigger range on offer and also a higher price range,” he said.

“I think this type of store is in demand in this area.”

[OneUp]

Full year results out:

NPAT up 26.5% to $7.1m. Seeing as they made $7.5m in the first half, TRS appears to have lost $0.4m in the second. Nonetheless, a slight improvement on the $0.5m loss last year.

EPS of 28.9c

Final dividend of 7cps; total 17 cps (a shade under 6% yield FF).

Forecast of $7.9-$8.1m NPAT under GAAP for FY06 (an increase of 12-14%). Expect TRS to beat those estimates - $8.5-$9.0m more likely.

Note however that under IFRS NPAT will be restated downwards, mainly because stock based incentives (i.e. options) will have to be charged against earnings.

With 15x interest cover, the balance sheet and cashflow also support acquisitions.

[tommy]

Hi oneup and all other Rejectors,

Thanks for the summary oneup, TRS delivered as hoped. Good dividend too! I wonder what happened to their talks with Millers?

http://stocknessmonster.com/news-ite...E=ASX&N=240610

http://stocknessmonster.com/news-ite...E=ASX&N=240611