AU : The Reject Shop - Cost out on track, still waiting on sales consistency
FY21 EBIT guidance disappoints (c25% below consensus) with sales deficits in CBD/large shopping centre stores the main driver, in addition to higher supply chain costs. The problem stores are those already largely targeted for closure at next renewal. The path forward is clear – secure material rental reductions or close the stores over the coming 12-18 months. Either way, we see scope for most of these stores to swing back to profitability reasonably quickly. We think TRS can resolve/offset current headwinds reasonably quickly, while the underlying cost reduction strategy is on track. We maintain an Add rating (A$6.80 PT), but have some lingering concerns about the group’s ability to deliver positive sales momentum for sustained periods in the long term – it’s been elusive thus far.
- 1 Macro Analysis/Global G7 reiterates support for SDR allocation and seeks to boost its impact
- 2 Strategy Note/Global G7's 'Build Back Better World' is not an answer to China's Belt and Road
- 3 Strategy Note/Vietnam Vietnam: The best emerging market is still spoilt by foreign ownership limits
- 4 Macro Analysis/Pakistan Pakistan's FY22 Federal Budget – Serious push on growth
- 5 Strategy Note/Global Egypt's military spend is not securing the Nile in its dispute with Ethiopia
This publication is being distributed by Tellimer solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not con...