Reject Shop Ltd (ASX:TRS) Share Price Hit 40% On Trading Update

Companies and indices mentioned:

The share price of Reject Shop Ltd (ASX: TRS) fell 40% in early trade on Wednesday after releasing a pre-AGM trading update.

Reject Shop is a discount retailer that sells a variety of items including food & drink, health & beauty and stationery.

The trading update:

Reject Shop revealed that comparable sales for the first 15 weeks of the 2019 financial year are down 2.4%. Over the latest 8 weeks comparable sales are actually down 3.9% despite a large marketing effort.

The retailer said that current conditions represented an extremely weak retail environment.

Reject Shop has downgraded its profit guidance for the first half of FY19 to between $10 million to $11 million. This compares to a previous prediction of $17.7 million first half profit based on comparable sales growth of just 1%.

Managing Director of Reject Shop Ross Sudano said: “The continuing absence of real wage growth and increases in the cost of many basic expenses (including mortgage rates) ensures that competition for the discretionary spend of consumers remains high.”

Amazon Australia just launched its pantry food & drink offering, which means there is another competitor for Reject Shop in the non-fresh food category.

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Jaz Harrison

Jaz Harrison

Jaz is a keen investor who loves to thoroughly poke holes in an investment idea before it has a chance of making it into her portfolio. Jaz invests for the long-term and doesn't sweat the small stuff. She strongly believes that empowering people with knowledge is the best way for them to take charge of their finances, which is exactly the approach she takes with her own money and investments.