# TRS - The Reject Shop



## 36590 (22 March 2007)

Could not find a thread on The Reject Shop which comes as a bit of a surprise. Has travelled from about $5 to $11 in the last year. 

TRS was mentioned in the Great Charts thread and nothing as changed since then with the SP powering on. 

Any thoughts on whether it can continue. I started watching ZFX @ 4.80 through $6.80 - $12 and never bought in, to now where it has slowed up. Are there any factors that will slow this one? 

 Not many sellers and difficult to find waeakness in the price to buy in.


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## dhukka (22 March 2007)

From a fundamental perspective an excellent business. ROE continues to improve from 42% in 2003 to a forecast 59% in 2006. TRS is the most profitable of the discount variety chains with gross operating margin of close to 100% and are net debt free. Looking to roll out another 11 stores this half, relocate and upsize some existing stores. On the downside expansion going forward will be limited by the declining availabilty of first class locations. From a valuation perspective I think you've missed the best part of the run up as it now trading about 15% above fair value.


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## Buffettology (9 April 2007)

dhukka said:


> From a fundamental perspective an excellent business. ROE continues to improve from 42% in 2003 to a forecast 59% in 2006. TRS is the most profitable of the discount variety chains with gross operating margin of close to 100% and are net debt free. Looking to roll out another 11 stores this half, relocate and upsize some existing stores. On the downside expansion going forward will be limited by the declining availabilty of first class locations. From a valuation perspective I think you've missed the best part of the run up as it now trading about 15% above fair value.




I see your a big follower of the value stocks dhukka, a good person to have on the forum!  Definately a good stock to have had, infact incredible!  But it is overvalued at the moment, have to wait for the market to cool and some speculation to push the price down.

Do you think there is much chance for international expansion Dhukka?


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## dhukka (9 April 2007)

Don't know about international expansion B. A great business model but you'd have to think competition in the discount variety chains in the US is much fiercer than here. 

I'm not a believer in the growth/value distinction, I want to buy businesses that  have both. Solid businesses which have good growth opportunties and at trading at reasonable prices - very difficult to do in the current market.


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## michael_selway (9 April 2007)

dhukka said:


> From a fundamental perspective an excellent business. ROE continues to improve from 42% in 2003 to a forecast 59% in 2006. TRS is the most profitable of the discount variety chains with gross operating margin of close to 100% and are net debt free. Looking to roll out another 11 stores this half, relocate and upsize some existing stores. On the downside expansion going forward will be limited by the declining availabilty of first class locations. From a valuation perspective I think you've missed the best part of the run up as it now trading about 15% above fair value.




Hi good analysis

*EPS(c) PE Growth 
Year Ending 30-06-07 44.1 26.8 26.4% 
Year Ending 30-06-08 54.5 21.7 23.6% 

Earnings and Dividends Forecast (cents per share) 
2006 2007 2008 2009 
EPS 34.9 44.1 54.5 66.5 
DPS 30.5 28.1 34.4 43.0 *

thx

MS


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## Buffettology (9 April 2007)

dhukka said:


> Don't know about international expansion B. A great business model but you'd have to think competition in the discount variety chains in the US is much fiercer than here.
> 
> I'm not a believer in the growth/value distinction, I want to buy businesses that  have both. Solid businesses which have good growth opportunties and at trading at reasonable prices - very difficult to do in the current market.




In the US there would be much more competition, but definately in the Asia-Pacific region there may be room.

I agree with your investment strategies.  Your more of an investor than a trader I guess by your posts?  

Same as me.  I also agree, its too hard in the current market to find good value in solid businesses.  Its just too high at the moment.  

What are stocks your looking at, at the moment or if the market falls?  I currently have 17 on my watchlist, but have to do a bit more research before I start investing in any of them (not to mention, wait for this bull to end), and only 1 that I think might be a good price currently.


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## Jikx (10 October 2008)

I feel like this is one serious cheap buy. Defensive in a recession (being a low prices retailer), strong cash flow, strong profits, low leaverage, and good dividend yield. Seems to have a lot going for it.

However, the price still tanked in the recent sell off. I think I might get a few parcels, seems to be ok for the medium term.


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## dhukka (11 October 2008)

Jikx said:


> I feel like this is one serious cheap buy. Highly defensive in a recession (being a low prices retailer), strong cash flow, strong profits, low leaverage, and good dividend yield. Might be one of the few gems to be picked up during the doom and gloom.




Agreed this looks attractive, but I think retailers have another leg down yet to come. Earnings forecasts are a little too optimistic for my liking as we go into a recession. That said, this company doesn't need to go too much lower for me to take a dip.


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## ROE (11 October 2008)

One of the stock I like a lot  and hope to buy a lot too in a bear market 
but I'm a patient man until the price is right it ain't got me click on that button 

keep fear and desperation in the market for a few more months and you can pick it up cheap


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## battery (5 November 2008)

been hearing alot about this stock lately, anyone one buying? 

doesn't look like we will see much action for another few months though...


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## Kipp (9 November 2008)

battery said:


> been hearing alot about this stock lately, anyone one buying?
> 
> doesn't look like we will see much action for another few months though...



I do like the TRS amazing track record of growth: seems to be in the 20 -30% range every year since listing 4 yrs ago, and I do think they will manage alright in the recession and their plans to expand into Tasmania.
But they are still trading at 15x Fy08 earnings, which I wouldn't consider a real bargain in todays market.

Not a great deal of cash in the bank ($5.3 mill in their Ann report) but I suppose this is not a major consideration at they have such little debt... and surely the weaker AUD$ can't be great for them, as I think the majority of their stock would be imported.  Do you know if they have hedging agreements in place?

I will be looking to get in sub $9... if it gets there.


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## oldblue (19 November 2008)

Hi Kipp.

Have you been tempted to buy yet? It's getting mighty close to that " sub $9 " SP and looks to have found support.
On my watchlist as a candidate to buy a few if/when it starts to trend up.


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## GumbyLearner (11 December 2008)

I wouldnt be tempted to touch these just yet. Overvalued in my opinion.
I would look for at least another 20-25% pullback from the current level of low-to mid $9. JMO


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## Tukker (26 October 2010)

Hmmm isn't it funny how all the good companies get so little attention on the forum, but people can rant and rave about their conflicting opinions on others for months. 

Great stock performance - 100% return from 2009. Hard to imagine a repeat performance, but still hard to imagine it failing in the near term.  Near term weakness perhaps might  technically visit to 17.60 again.  

Anyone else feeling it?


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## skc (9 December 2010)

Ouch! High growth stock with profit downgrade gets savaged. Down 22% to $13.43.

One-off stumple or complete change to growth outlook??


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## skcots (9 December 2010)

skc said:


> Ouch! High growth stock with profit downgrade gets savaged. Down 22% to $13.43.
> 
> One-off stumple or complete change to growth outlook??





Wow am I glad I did not buy in a while back. Lucky I had no cash at the time.

I would not have thought that interest rate rises would have a great effect on a discount shop. One of the selling points in TRS's last communication was their plans to continue their rapid expansion so I imagine this will change the growth outlook significantly.


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## Tukker (9 December 2010)

JBH seems to be suffering the same fate. Interesting dynamic happening in the growth sectors.


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## robusta (9 December 2010)

Definately a company to keep a eye on. I thought they were about 20% overvalued before today so I will need the price to drop a fair bit more before I get into TRS.


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## ROE (9 December 2010)

robusta said:


> Definately a company to keep a eye on. I thought they were about 20% overvalued before today so I will need the price to drop a fair bit more before I get into TRS.




Don't worry it will get much cheaper...

The landscape has change for TRS you can read my comments here 

http://www.hotcopper.com.au/post_single.asp?fid=1&tid=1329631&msgid=7485219

JBH will suffer similar faith not as bad but a slow one, as the three areas I identified that will hit JBH.

JBH price for growth but I don't think it can deliver growth....

JBH is most at risk for on line shop attack as stuff they sell can easier purchase from the net for hell of a lot cheaper.

competition from good guys, WoW sight and sounds and a renew Dick Smith
pricing strategy will build momentum....haven't bought anything from JB for last 18 months as good guys and dick smith are cheaper...

three price deflation...


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## robusta (9 December 2010)

ROE said:


> Don't worry it will get much cheaper...
> 
> The landscape has change for TRS you can read my comments here
> 
> ...




Good point ROE, you warned me about JBH a while ago but I held on because I thought they had an competitive advantage. (lowest cost provider) Now I am wondering how much is being eroded by traditional and online competition or is it mainly a general slowdown for retail?

I will think long and hard before investing in TRS.


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## GumbyLearner (9 December 2010)

Holy hammering. That's ugly. I wonder if it's across the board retail or just non-essential cheap stuff.
Holders would be crying at the return on the divvies if I they had bought within the last 12 months.


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## niknah (10 December 2010)

They're not the cheapest shop.  But I've seen them take over spots from other bargain stores and bring in more customers, like the one in broadway.  You can fit two people through an isle there, you won't make it through an isle at hot dollar if you're obese, and they're better staffed usually.

But if the cause is high interest then this doesn't look good, no ones betting on interest rates coming down, only stable or up.


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## VSntchr (27 December 2010)

Average in-store spend is something like $13, they are a low cost provider...providing somewhat essential type items...
The statement that interest rate rises have caused the profit downgrade seem a bit dodgy to me.

I could of course be completely wrong, but in a recent Eureka Report article I noticed that a column writer pointed this out also. He seemed to think it may be an ordering problem or something similar...

Something to consider!


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## Smurf1976 (27 December 2010)

Commonsense tells me that if interest rates are rising and consumers are struggling financially then that ought to be good, not bad, news for a discount retailer? 

A discount store blaming tough economic conditions for their troubles seems comparable to an unbrella salesman blaming the rain for people not buying umbrellas. Doesn't really make a lot of sense to me.


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## Julia (27 December 2010)

The following is Huntley's explanation.  Also, the SP has run pretty hard in a sideways market.  I wouldn't be regarding the present situation as a permanent dislike of the stock overall.


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## tinhat (28 December 2010)

I bought some at 13.41. Let's see what happens next...


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## robusta (13 January 2011)

tinhat said:


> I bought some at 13.41. Let's see what happens next...




Heve been wanting to pick up a piece of this business for a while now. Maybe tomorrow will provide that opportunity.

http://www.asx.com.au/asxpdf/20110113/pdf/41w5gkynhj1z44.pdf


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## niknah (13 January 2011)

> With the flooding of the Ipswich area on January 11,
> the base level of the Distribution Centre is now *under several metres of water.*
> The Centre is likely to be closed for a minimum period of 8 weeks due to significant water damage to
> equipment; including but not limited to some components of the conveying equipment, forklifts,
> ...





According to their last annual report, the Ipswich distribution center services about 80 out of 200 stores.
They had $50mill in inventory.
Their stockturn is 5.8,  approx 8 weeks.

Fortunately the Ipswich distribution center is only a year or two old and they had survived without it before then.


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## Noddy (13 January 2011)

One thing I've learnt about share trading -

Good news does't always lift the share price, but bad news always has a negative effect. 

Regards to all
Noddy


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## Julia (13 January 2011)

Noddy said:


> One thing I've learnt about share trading -
> 
> Good news does't always lift the share price, but bad news always has a negative effect.
> 
> ...



Do you feel like offering why you think this is so?


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## fanger (14 January 2011)

Lets hope the stock doesn't get hammered to much as its already down 30% after its profit down grade.


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## skc (14 January 2011)

fanger said:


> Lets hope the stock doesn't get hammered to much as its already down 30% after its profit down grade.




Chart is showing a good double bottom and stock spiked down today on bad news but now trading up. Coupled with much better sentiment towards retail stocks this week...There's probably a trade on the offer with TRS. Swing high target ~$15 to $15.5 to partially close the gap.


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## robusta (14 January 2011)

Noddy said:


> One thing I've learnt about share trading -
> 
> Good news does't always lift the share price, but bad news always has a negative effect.
> 
> ...




Did not get cheap enough for me. Sooner or later opportunity will come with TRS or another company will show itself.


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## skcots (14 January 2011)

skc said:


> Chart is showing a good double bottom and stock spiked down today on bad news but now trading up. Coupled with much better sentiment towards retail stocks this week...There's probably a trade on the offer with TRS. Swing high target ~$15 to $15.5 to partially close the gap.
> 
> View attachment 40841




Is'nt there too much volume on the second bottom?
I mostly look at fundamentals so this kind of thing is new to me.


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## skc (14 January 2011)

skcots said:


> Is'nt there too much volume on the second bottom?
> I mostly look at fundamentals so this kind of thing is new to me.




Volume at second bottom relative to first is pretty light.

Resistance at $15.1 offers a reward of ~$2 compared to a risk of 40c (assuming stop at today's low), or R:R ~5.


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## skcots (14 January 2011)

skc said:


> Volume at second bottom relative to first is pretty light.




True. I must have misread the chart earlier.


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## zac (14 March 2011)

Im new to learning about stocks etc,
I was only tonight looking at the Reject Shop as its been quite the success story but December 8 where the share price dropped rapidly, is there any reason/event that caused it?

It was around that date some people calculated the Intrinsic Value of the shares to be $15-16, yet recovery hasnt seemed to have occured.

Its just made me lose a little confidence in the whole value investing theory etc


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## skc (15 March 2011)

zac said:


> Im new to learning about stocks etc,
> I was only tonight looking at the Reject Shop as its been quite the success story but December 8 where the share price dropped rapidly, is there any reason/event that caused it?
> 
> It was around that date some people calculated the Intrinsic Value of the shares to be $15-16, yet recovery hasnt seemed to have occured.
> ...




Learn to search company annoucement on the ASX website would be a good start for your learning.


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## oxygen (16 April 2011)

Anybody got any thoughts on the new low reached this week? $11.35. Starting to look attractive again IMHO and get a Valu.able valuation of 10.99 for 2011. A drop into low to mid 10's could present a good buying op here. Last i heard Roger's own valuation was about $10.20.


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## Country Lad (16 April 2011)

oxygen said:


> ......... Starting to look attractive again




Could get even more attractive over the short term.

*"Whilst the Company’s insurance policies are robust, the recoupment of all losses associated with the flooding is uncertain and any estimate is premature at this stage, particularly with respect to the ongoing impact on sales, gross margin and increased costs of working throughout the half.

As a result the Company is unable to provide updated profit guidance as the overall impact of the Queensland floods can not be fully evaluated at this stage."*


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## ROE (16 April 2011)

zac said:


> Im new to learning about stocks etc,
> I was only tonight looking at the Reject Shop as its been quite the success story but December 8 where the share price dropped rapidly, is there any reason/event that caused it?
> 
> It was around that date some people calculated the Intrinsic Value of the shares to be $15-16, yet recovery hasnt seemed to have occured.
> ...




I know this business fairly well and I state previously, I reckon TRS model is under threat..It make good money up until now but its model can easily be copy and now Top Bargain and Hot dollars on their turf there is nothing they can do to defense it.

I don't believe management when they said consumer is not spending....I stand by my view that competition is eating into their earning.

Mortgage stress or hard time wouldnt stop me from buying a cheapo screw drivers and birthday cards and most stuff sold at TRS. In fact the poorer the people the more likely they shop at this place
the two dont add up in my logical world 

I don't know who value them at $15-$16 but I wouldn't.
there is no certainty in their earning due to increase competition therefore you cant make reliable calculation

To value a business you need to have a certain degree of confident in the business earning  well that how I value most of my stock...

Make no mistake TRS is a good business but you buy stocks for its future not its past, at one time I did like TRS not any more because of its future with the reasons I stated above


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## oxygen (17 April 2011)

Good call ROE. I think it would be dangerous to be buying now and expecting the same sort of growth it has achieved up to now. If you value it accordingly and are willing to take a lower return it should still do quite well in the coming years as more stores open and consumers begin spending again. Dividend is also nice as well. As far as stocks in the discretionary space I can't see many i'd be confident will outperform it. Maybe JBH but it appears to be at the same stage in it's business life and another maturing business with slower growth going forward.


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## VSntchr (25 May 2011)

updated earnings guidance of 16-17m.
I was expecting more than this but obviously the market was expecting alot less!


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## skc (25 May 2011)

VSntchr said:


> updated earnings guidance of 16-17m.
> I was expecting more than this but obviously the market was expecting alot less!




Lol. Same here. I had my finger on the short button but luckily didn't push it. All the retailers went up today for whatever reason... I bet you some broker upgraded them.


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## VSntchr (25 May 2011)

Yeah, I read a few analysts were bullish on TRS...cant remember which ones..perhaps credit suisse?

I really wish that the market hammered this announcement...was starting to look decently priced for a long term buy. We'll see what happens in the next month or so..


If you dont mind me asking, what is your preferred method of shorting a stock?


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## skc (25 May 2011)

VSntchr said:


> Yeah, I read a few analysts were bullish on TRS...cant remember which ones..perhaps credit suisse?
> 
> I really wish that the market hammered this announcement...was starting to look decently priced for a long term buy. We'll see what happens in the next month or so..
> 
> ...




CFDs. IB also recently have a list of ASX stocks for shorting.


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## VSntchr (22 September 2011)

About to break $9...getting interested.
They seem back on their feet after the impact of the floods...interesting to see ROE's point of view that the model is under threat..

Will keep pondering and gathering information while mr. market decides how low this one will go...


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## McLovin (22 September 2011)

VSntchr said:


> About to break $9...getting interested.
> They seem back on their feet after the impact of the floods...interesting to see ROE's point of view that the model is under threat..
> 
> Will keep pondering and gathering information while mr. market decides how low this one will go...




It's still on ~15x earnings. For a business coming to the end of its growth phase this is still a pretty hefty PE. My own opinion is that PE compression will keep the share price range bound for a while.


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## ROE (1 October 2011)

I spot another business cutting into TRS ..

Smart Dollar ...sell same stuff...

In business, where there is high margin and not a big moat people will start to compete and
want your business... and there isnt much you can do

it's not like coke where with billion of bucks you cant copy the taste and people preference for the drink...


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## Smurf1976 (1 October 2011)

ROE said:


> I spot another business cutting into TRS ..
> 
> Smart Dollar ...sell same stuff...



I'm not sure about the situation around the country, but there's locally based competitors as well. I noticed what looked like a one store (thus far...) operation in Melbourne CBD this week. And down here in Tas there's the very well established Chickenfeed and now there's a new mob called Shiploads as well. In SA there's a chain called Cheap As Chips and no doubt there's other competitors in the other states as well.


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## notting (24 August 2012)

Looks to have overshot and now attempting to re-impregnate/penetrate it's upper bollinger band, 200 day moving average and 11.20 resistance all at once.
Retailers doing all kinds of kinky things at the moment!


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## fanger (7 September 2012)

TRS has had a great run after reporting but its starting to look abit toppy. Anybody have a technical view on TRS?


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## db94 (24 January 2014)

massive drop today down approx 25% so far


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## VSntchr (24 January 2014)

ROE said:


> I know this business fairly well and I state previously, I reckon TRS model is under threat..It make good money up until now but its model can easily be copy and now Top Bargain and Hot dollars on their turf there is nothing they can do to defense it.
> 
> I don't believe management when they said consumer is not spending....I stand by my view that competition is eating into their earning.
> 
> ...




Margins under pressure as per the latest announcement would lend credence to your opinion ROE. 

The easy money has been made with TRS in my opinion. So even if their model is sustainable, they simply cannot achieve the growth that they have in the past. They have openly admitted that new store sales are cannibalising existing stores. So any new stores that are opened from here are pretty much an attempt to optimise store locations/efficiency as the company seeks to close under-performing stores. 

If you think that the model is sustainable then this is still a good business, but perhaps not at this price with the level of growth baked in.


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## ROE (24 January 2014)

VSntchr said:


> Margins under pressure as per the latest announcement would lend credence to your opinion ROE.
> 
> The easy money has been made with TRS in my opinion. So even if their model is sustainable, they simply cannot achieve the growth that they have in the past. They have openly admitted that new store sales are cannibalising existing stores. So any new stores that are opened from here are pretty much an attempt to optimise store locations/efficiency as the company seeks to close under-performing stores.
> 
> If you think that the model is sustainable then this is still a good business, but perhaps not at this price with the level of growth baked in.




Something that came out of the left side field which TRS havent account for is K-mart
they are killing TRS in major shopping centre...Kmart sell stuff way cheaper than TRS ...

and kmart now stocks similar stuff to the TRS ... I doubt TRS has the ability to counter kmart price without sacrificed margin and profit hence the need to focus on major shopping centre ...
in all major mall where there is a TRS shop there is Kmart.

Kmart is my destination of choice for cheap and cheerful stuff, they under cut anyone what sell anything similar to them even the ever popular lego.

Guy Russo is Managing Director of Kmart, read up on him, not many people goes head to head with him and win, he is the KING of discount and volume...Since he took over Kmart it has a remarkable turn around...


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## skc (24 January 2014)

When an annoucnement says "cannabilisation of sales", it means they have very much saturated the market with their locations and future growth (by simply opening new stores) is going to be hard to come by.

There'd be some pretty serious re-rating involved when a stock goes ex-growth.

BTW my wife loves Daiso stores... it's like cheap AND quality stuff.


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## Ves (24 January 2014)

I don’t hold TRS, and I haven’t researched it extensively.  But I do know that they are in the midst of aggressively expanding their store count.  Generally rapid expansion comes with temporary operating inefficiencies in operating costs and erodes margins.   Retailers expanding rapidly need a solid financial base and strong cash flow to ride through the initial bumps.  TRS to their credit has both.  It sounds like their expansion is more of a 2015 and 2016 story in terms of proof of its success via an uptick in earnings.   Once the expansion is over, or at least has slowed down, they will be able to fine tune their distribution channels, their staff costs, marketing etc. It can also take time for people to come through the doors, if they ever will. Then they can ideally make use of their greatly increased scale and return to higher margins.   All of this is in the ideal scenario.  I'm not making any predictions.

The best source of competitive advantage for any national retailer in terms of competing against peers is from a lower cost base arising from a bigger distribution network and group buying power.  Kmart is also recently or perhaps still undertaking a group wide review which has probably given them a fair bit of momentum and reinvention.  Hard to say if this is a temporary state of affairs or if it is maintainable.

Increased scale and brand recognition is what TRS is going for and it still remains to be seen whether it will work over the long term,  but if I was a holder I would not be panicking – at least not yet.  

I'm ambivalent to the current share price.  It doesn't offer nearly enough reward for me to compensate for the risks.


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## McLovin (24 January 2014)

I don't think these guys are ex-growth. Maybe they've opened a few too many stores too fast, but that'll get digested over time. They know how to sell cheap cr@p and it's unlikely that has changed. Wouldn't buy at this price and don't hold.


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## Valued (24 January 2014)

A dangerous time to enter in any position. It's a gamble. You don't know if it will gap up from bargain hunters on Tuesday (you give them the weekend and a public holiday to talk themselves into buying), making a short position a gamble. Going long doesn't sound like much fun right now either. It's still hitting new lows as we speak.


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## notting (24 January 2014)

At $16.90 PE was 23.(yesterdays close)
Pretty optimistic for the sector!

Getting real now that the great expansion is now almost complete.
Gotta give the new stores a bit of time to be discovered and get into a rhythm.

A good advertising campaign in an improving environment may be positive.
Not many wanting to wait and see today it seems.
It's not that high volume and market is still a little on the light side.
Retail sector got smashed along with it.
Today being a day before a long weekend after a DOW plunge after a long run.
May be overdone.  
Weekly retrace of the fib at 68.1 - penetrated to assist the sell off.


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## skc (24 January 2014)

McLovin said:


> I don't think these guys are ex-growth. Maybe they've opened a few too many stores too fast, but that'll get digested over time. They know how to sell cheap cr@p and it's unlikely that has changed. Wouldn't buy at this price and don't hold.




Well today it's being sold that way. Took every retail stock down with it as well. Supercheap first, TRS second... the next will be? (JBH is my guess) 

They say history doesn't repeat but it often rhymes.





Wouldn't surprise me if the price action follow a similar path. Although SUL got 3 broker upgrades the day after the plunge. It's all underwater now but it did offer a better R:R for the short trade.


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## skc (28 January 2014)

skc said:


> Well today it's being sold that way. Took every retail stock down with it as well. Supercheap first, TRS second... the next will be? (JBH is my guess)




JBH trading update today. Everything is sweet and share price up 7%.

I am a bloody genius! :bad:

Lol.


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## boyplunger777 (28 January 2014)

First time post... be kind to me please... 

There isn't much social chatter on $ASX:TRS today looking at Scutify - http://www.scutify.com/company.aspx?ticker=ASX:TRS

Massive dip this past week... anyone still keen on it?


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## clinta44 (28 January 2014)

boyplunger777 said:


> anyone still keen on it?




I'm keen on it, but not at its current price.


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## notting (28 January 2014)

I'm kinda surprised that JBs strong results today did not have a positive effect on TRS.
If JB is OK this is OK.
However, being down on a Monday after huge sell off on a Friday is not good, though it did start the day off more positively after a negative lead in general.
It aint dead yet and a hard reversal will be on, if the new shops click up a gear or two.
Looking for volume coming in and it has been on the short lived reversals today.


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## McLovin (29 January 2014)

notting said:


> I'm kinda surprised that JBs strong results today did not have a positive effect on TRS.
> If JB is OK this is OK.
> However, being down on a Monday after huge sell off on a Friday is not good, though it did start the day off more positively after a negative lead in general.
> It aint dead yet and a hard reversal will be on, if the new shops click up a gear or two.
> Looking for volume coming in and it has been on the short lived reversals today.




I'll wait to see the detail of JBH's result, because I'm wondering how much of the margin uplift is just from them selling higher margin white goods through JBH Home.


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## skc (29 January 2014)

McLovin said:


> I'll wait to see the detail of JBH's result, because I'm wondering how much of the margin uplift is just from them selling higher margin white goods through JBH Home.




May be... but that's not really a problem though, is it?

I think JBH got sold down today on the back of some analysts (from Credit Swiss I think) relating the poor performance of a US electronic retailer to the future demise of JBH.


----------



## McLovin (30 January 2014)

skc said:


> May be... but that's not really a problem though, is it?




If its browngoods margins are still falling (which is my suspicion), then yes it is. Because flogging TV's and Playstations is their business, not the latest wall oven. IIRC, there's a few suppliers who are not allowing their products to be sold in JBH Home stores because the store fitouts are too "cheap"(no doubt they'll come around if the venture becomes wildly successful). I don't think they'll enjoy the returns from whitegoods that they've managed to rinse out of their electronics biz. Just my theory of course and I could be completely wrong when the report comes out.


----------



## Valued (30 January 2014)

skc said:


> May be... but that's not really a problem though, is it?
> 
> I think JBH got sold down today on the back of some analysts (from Credit Swiss I think) relating the poor performance of a US electronic retailer to the future demise of JBH.




If it did go down due to that report, I would guess professional interests knew about it before retail traders did. It looked like they were selling out before today.

I haven't gone to a JB Home store yet. Are they trying to be Harvey Norman but instead of rip off prices and hand holding, they have cheaper prices but poor customer service?


----------



## Valued (30 January 2014)

notting said:


> I'm kinda surprised that JBs strong results today did not have a positive effect on TRS.
> If JB is OK this is OK.




I am not 100% sure that's how it works. Just because JBH is ok does not make TRS ok and vice versa. They don't even sell the same sort of stuff. 

I have always thought it odd people talk about things like "consumer confidence". When was the last time a consumer said "I am not confident enough in the economy to buy that TV". People will buy a TV since they need one. It all sounds like rubbish to me. If people spent a tonne of money on white goods/TVs/Xbox/Playstation the last few years, well they probably still have the ones they bought. They probably won't buy a new one for a while. Example: say 75% of the adults in Australia go buy a TV at JBH. Next year the other 25% do. This is not a lack of consumer confidence. The people who bought the tv the year before still have theirs and it works perfectly. 

Consumer confidence would actually apply more to TRS than JBH in my opinion. People who would have bought home entertainment will continue to do so. People might not be so inclined to buy what ever random stuff TRS happens to be selling. They sell some food items that are cheap but I doubt they account for a high percentage of their turnover since most people will just go to a supermarket.


----------



## robusta (19 February 2014)

Results out today.

http://www.asx.com.au/asxpdf/20140219/pdf/42mt83xq5r76jw.pdf

Read somewhere they hit guidance, I should think so as latest update was only a month ago. If you read between the lines it looks like management took their eye off the ball while busy opening new stores. Concentration on product mix and general good retail skills may right the ship in the medium term. Difficult to see any positive news in the next few months.


----------



## ROE (13 March 2014)

ROE said:


> Something that came out of the left side field which TRS havent account for is K-mart
> they are killing TRS in major shopping centre...Kmart sell stuff way cheaper than TRS ...
> 
> and kmart now stocks similar stuff to the TRS ... I doubt TRS has the ability to counter kmart price without sacrificed margin and profit hence the need to focus on major shopping centre ...
> ...




People now picking up on the Kmart story...
http://www.theage.com.au/business/r...is-bryce-in-surprise-exit-20140313-34nng.html


----------



## ROE (10 June 2014)

Another profit downgrade, still blaming customer not spending and sentiment
nothing about competition eating into their market 

a judge of good management is not in good time but when you have issues and you are being frank and honest and acknowledge you have issues.


----------



## pinkboy (10 June 2014)

ROE said:


> Another profit downgrade, still blaming customer not spending and sentiment
> nothing about competition eating into their market
> 
> a judge of good management is not in good time but when you have issues and you are being frank and honest and acknowledge you have issues.




Looks like the announcements for both PBG and TRS were written by the same person this morning.......


pinkboy


----------



## notting (18 July 2014)

Seems the sector has chronic issues.

http://www.thebull.com.au/articles/a/47431-jobs-to-go-as-retailer-shuts-down-stores.html


----------



## ROE (18 July 2014)

notting said:


> Seems the sector has chronic issues.
> 
> http://www.thebull.com.au/articles/a/47431-jobs-to-go-as-retailer-shuts-down-stores.html




This business has been on life support for the last decade, coming in and out of administration and erratic earning nothing new here, current environment just nailed the coffin and send it to corporate graveyard and if TRS think they can beat the new K-mart good luck


----------



## VSntchr (15 October 2014)

AGM announcement has said that since the release of results they have been fairing much better, comparable store sales for the last 2 weeks have been "flat". You know business is tough when your stoked about getting back to even.

I don't really have much to add, I just wanted to voice my opinion on their latest tv ads: awful.
Even my partner (who watches advertisements without the lenses of a business analyst) said "that is just wrong...what's with the song!!!".
I hope, for investors sake, the new leadership has something better up there sleeves than this 'revamped' marketing campaign.


----------



## skc (15 October 2014)

VSntchr said:


> AGM announcement has said that since the release of results they have been fairing much better, comparable store sales for the last 2 weeks have been "flat". You know business is tough when your stoked about getting back to even.




I have no idea what the market was cheering for upon this update. I totally expecte them to be canned on open. They are somewhat lucky to be doing a trading update today, as opposed to say last Monday.



VSntchr said:


> I don't really have much to add, I just wanted to voice my opinion on their latest tv ads: awful.
> Even my partner (who watches advertisements without the lenses of a business analyst) said "that is just wrong...what's with the song!!!".
> I hope, for investors sake, the new leadership has something better up there sleeves than this 'revamped' marketing campaign.




+100. Complete piece of crap... just like the things that they sell.


----------



## So_Cynical (15 October 2014)

VSntchr said:


> I don't really have much to add, I just wanted to voice my opinion on their latest tv ads: awful.
> Even my partner (who watches advertisements without the lenses of a business analyst) said "that is just wrong...what's with the song!!!".
> I hope, for investors sake, the new leadership has something better up there sleeves than this 'revamped' marketing campaign.




This ad i assume?
`
[video=youtube_share;kigOkiXIe3E]http://youtu.be/kigOkiXIe3E[/video]


----------



## littleshire (27 November 2014)

Hi,

Does anyone know what is going on with this one?
The slide seems to be accelerating. There have been no new announcements so far.

Regards,


----------



## VSntchr (27 November 2014)

It was dropped from the standard MSCI index in the latest review which wouldn't have helped.

The operational model of this business is in question and the competition is stiff.
General market uncertainty around whether they can continue to provide valuable growth to shareholders going forward is driving the price down


----------



## ROE (27 November 2014)

If you invest in this sort of business it helps to troll through their shop while going out shopping or 
something like that if you are observant it will tell you the story before the bad news hit the market.

TRS model has change some what over the year, they start stocking bulky high value item which isn't cheap
and there aren't sell them and they taking up lot of spaces, I notice this a while ago

combine with massive competition from kmarts and everyone else in the game I decided it is a no go zone.

as price fall from teens to high single digit every one call it cheap , it getting hell of a lot cheaper because their business model is under threat and competition is hitting them left and right plus the make up of their stores no longer what used to drive their sales.

The only way out for them is re-structure their stores and get rid of those bulky items and go back to the old day
and do it cheaper than every else and hopefully customers will come back...to do this, they need to drop margins and profit so they are between a rock and a hard place

I don't think it is a bad business but there are too much uncertainty around them and it is hard to see where the light at the end of the tunnel is and that what the market doesn't like.

If they can work out how to re invent the stores format and drive sale then I think there is some value in them but can they do it and deliver high margin and profit? is their model still working with dozen of competitors around?

and that is million dollar questions and if they can pull it off the stock will recovered until then I cant see light at the end of the tunnel short term.


----------



## niknah (28 November 2014)

Most of what they sell is imported.
The AUD is going down so they'll have to pay more.

But it maybe a good sign for the economy if people are spending less money in shops like these.


----------



## ROE (9 February 2015)

The Stock price is now tempting and should be a decent margin of safety for the trouble it is facing


----------



## oldblue (10 February 2015)

ROE said:


> The Stock price is now tempting and should be a decent margin of safety for the trouble it is facing




Perhaps - but the shareprice is still in a consistent downturn. I'll resist the temptation a bit longer.


----------



## ROE (13 February 2015)

on fundamental at this price it is compelling value despite its problem

I factor in 20% decline in earning and various scenario and they don't grow again for a while
it still stack up.

even dividend drop to 25c it still close to 5% fully franked on $5.40, once the market see some stability in this, it also a yield play.

I am in, it another stock the market start to get sick of it and left it drift south.
If and when it turns, it will rally hard and re-rate and I did a bit of scouting and look like they 

reverse back to their old way slowly and abandon the failed strategy of stocking large crappy items so it may takes a bit of time to show up.


----------



## ROE (18 February 2015)

luck is on my side I made a correct call at the bottom 

yield chaser will be in, now the business seem stablise and 
it is on its way to return to the good old day reject shop with the right mix of products


----------



## notting (18 February 2015)

Was a good call, well done.
I was listening!!



> Sales in the second quarter stabilized, as the business was refocused on delivering great value on everyday products.



Same store sales were down for the last Qtr, but up for the first half of this which is hopeful!
The art of retail is compelling pricing and turnover.  They are focusing on that and that should bode them well.
It needs to get up through $6.50 and hold for a bit to confirm a bottom.


----------



## notting (20 February 2015)

Well looks like that's it for the short squeeze.
Now for the verdict.


----------



## peter2 (13 March 2015)

The TRS chart looks interesting. Volume and volatility have dropped off, yet the price hasn't moved.


----------



## galumay (13 March 2015)

I quite like the look of TRS, but each time I have a look at it I cant get past the negative free cash flow year after year, the Capex spend is huge. The rest of their metrics look ok but the -FCF puts me off, it would be understandable if it were a once off, but its the last 2 years reported and looking to be heading that way this year.


----------



## VSntchr (13 March 2015)

galumay said:


> I quite like the look of TRS, but each time I have a look at it I cant get past the negative free cash flow year after year, the Capex spend is huge. The rest of their metrics look ok but the -FCF puts me off, it would be understandable if it were a once off, but its the last 2 years reported and looking to be heading that way this year.




Still doing the store roll out...when they finish the capex spend should reduce. However with more stores means more maintenance capex. Perhaps if you could find out the split between growth (roll out) and maintenance capex you could get a better idea of steady state FCF. Depreciation might be a good place to start, assuming that the accounts are a true reflection.


----------



## notting (16 April 2015)

Doing it with its 61.8 retrace from the spike after the last report.
Lets see what the volume action is to see if their is keen buying or despairing selling at this point.


----------



## piggybank (19 August 2015)

galumay said:


> I quite like the look of TRS, but each time I have a look at it I cant get past the negative free cash flow year after year, the Capex spend is huge. The rest of their metrics look ok but the -FCF puts me off, it would be understandable if it were a once off, but its the last 2 years reported and looking to be heading that way this year.




Hi Galumay,

Is here a formula for working out the "cash flow" please?

In today's Full Year 2015 announcement to the market, it said one of the highlights was the *Strong cash flow* performance. Could either yourself or someone else explain the difference between last years (negative) cash flow and this years (positive) one?

The results presentation can be found here:- http://www.stocknessmonster.com/news-item?S=TRS&E=ASX&N=427848

Cheers
PB


----------



## Cashflows (24 August 2015)

Hey Piggybank, this might not be right but I'll try to answer your question (And to keep my mind focused on the fundamentals of investing instead of all the red I see on my screen...) 

The most basic formula for Free Cash Flow (FCF) or the cash that the business has made that can be taken out of the business and given to the owners is:

Net Operating Cash flow - Capital Expenditure = FCF

CAPEX is funds used to acquire, maintain or upgrade assets. It is usually found in the 'Investing Cash Flows' section of the cash flow statement under the heading 'Payments for Property, Plant, and Equipment'. 

So here is TRS' basic FCF:
$46,852,000 - $17,119,000 = $29,964,000 As opposed to last year's negative cash flow of: - $7,338,000

As far as I can tell, there are two 'main' reasons as to why this result is so different:

The first reason is that net operating cash flow almost doubles from $24,320m to $46,852m. While there was a decrease in the company tax of about $4,435m, this still doesn't account for $18,097m. The only reason I have found is that there is increased operational leverage within the business due to management finding increased efficiencies in the supply chain and distribution network. This was a big focus of ross sudano when he reviewed the company and the evidence is that while sales increased by 6.4%, expenses only increased by 4.1%, resulting in an expansion of margins for the business. 

The second reason is a sharp decrease in CAPEX, which decreased by about 46% from $31,658 to $17,119. This was mainly the result of less store openings. 

The difference of these two changes result in an increase of $32,636,000 in positive cash flow - which is pretty close to the $29,964,000 FCF calculation we got at the start. 

Hope this wasn't too confusing (or wrong) for anyone, and that it answers your question piggybank...


----------



## piggybank (18 October 2015)

Hi Cashflows,

Thanks for taking the time to explain the differences there - much appreciated.

​


----------



## notting (21 October 2016)

Been mauled again this week.
It's quite a good trading stock as it's moves tend to be exaggerated.
Before reporting there was a trading expectation of a spike which had become a bit of a tradition after a report.  But the report disappointed instead and so it solf off after that run up in anticipation a further spike.

Then it was realized that still with a PE of 22 and growth off the table, for the moment, it was still too high.
But now, it's not a bad bond! 
Paying nearly 6% fully franked and a PE of 13.  Gotta find a floor here you'd think. (perhaps fill the gap back up to and test it's 61.8% weekly retrace 9.24 before consolidating as a medium term divy dog.)

It'd make a pretty good buy if it tested $6 which is the last standing technical level.
I would be very surprised if it gets there.  could have a good start to the week next week before consolidation.


----------



## notting (7 April 2017)

Let me read that again.
Hmmm.  We are now loosing money.  We have pretty much done all we could to turn things around.
We haven't.
We are not in danger of breaching debt covenants. 
But hell what's going to stop us?

Retailers can't even sell cheap crap anymore

How Solomon Lew does it is beyond me.


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## notting (29 June 2018)

Ready to Rock? or Roll?


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## jjbinks (17 October 2018)

Very bad day
I had some shares which I fortunately sold 1 week ago!


----------



## bigdog (17 October 2018)

Very bad news and day today for TRS (my tip in 2018 yearly tipping)






https://www.aussiestockforums.com/posts/999754/delete
*ASX ANN     7/10/2018 8:30:30 AM Pre AGM Trading Update









*


----------



## luutzu (17 October 2018)

jjbinks said:


> Very bad day
> I had some shares which I fortunately sold 1 week ago!




I added some more today. At $2.61.

Retailers will have some tough time ahead. But at that price, I can wait. 

I did my maths about one and half year ago and put its long term price at $8 to $10. But that's me.


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## notting (18 October 2018)

luutzu said:


> I added some more today. At $2.61.
> Retailers will have some tough time ahead. But at that price, I can wait.
> I did my maths about one and half year ago and put its long term price at $8 to $10. But that's me.



You may need to go back to Math school....


Mastered the art of shockers since 2011 Yes  it's the Reject shop, true to it's name in more ways than one!! -






Let's hope that it's just a badly managed company rather than their excuse which is basically - “The continuing absence of real wage growth and increases in the cost of many basic expenses (incl. mortgage rates) ensures that competition for the discretionary spend of consumers remains high."

If this excuse is the real reason then this really does indicate that we are on a knife edge.
The Reject Shop is kind of the last place you shop before going to the Salvos and if it's feeling these relatively insignificant problems and tweaks so heavily then we must be so overstretched with mortgages and utility costs that we could be in for a huge crash. One suspects it's not this bad, fortunately!


----------



## luutzu (19 October 2018)

notting said:


> You may need to go back to Math school....
> 
> 
> Mastered the art of shockers since 2011 Yes  it's the Reject shop, true to it's name in more ways than one!! -
> ...




Seems the market just look at the missed H1 earnings by some 40% and marked the share price down by a similar drop. 

Just to be sure I didn't read the figures wrong...

TRS have about 30M shares outstanding. At $2.50 or about that's $75M for the entire shop right?

Zero debt.

Net cash flow from operations about $30M a year.

Historical net profit about $15M a year. 

Business is still profitable, not losing money. Its cost control from previous year's report looks like cost is being handled pretty well. 

Just added a bit more.


----------



## notting (19 October 2018)

If you compare the chart to MYR it's not much different accept MYR did it in a much smoother fashion.
So you could argue it's a particular way of doing retail that just doesn't have any kind of future growth attached to it.  MYR has bucket loads more debt and rent commitments so you'd have to say it's  OK at this level.


----------



## luutzu (19 October 2018)

notting said:


> If you compare the chart to MYR it's not much different accept MYR did it in a much smoother fashion.
> So you could argue it's a particular way of doing retail that just doesn't have any kind of future growth attached to it.  MYR has bucket loads more debt and rent commitments so you'd have to say it's  OK at this level.




I haven't looked at MYR. 

Yea, bargain hunting isn't always pretty but it might pay the bills.

Its big growth initiative is to sell storage solution. People have things to store in a recession or will they offload them off on eBay and Gumtree?


----------



## peter2 (9 November 2018)

Wait a minute. Did I read that someone mentioned that TRS was "interesting"?  TRS is one sick chart at the moment, about as interesting as the walking dead. I didn't see the TV series of the same name, but that must have been interesting to have lasted for so many seasons. I see The Walking Dead is into it's final season, just like TRS.


----------



## luutzu (21 November 2018)

Takeover offer at the low, low price of $2.70.

TRS is worth a whole lot more than that. At least $5.00, and a lot more if the holding is longer (for when the retail condition "normalises").


----------



## luutzu (21 November 2018)

peter2 said:


> Wait a minute. Did I read that someone mentioned that TRS was "interesting"?  TRS is one sick chart at the moment, about as interesting as the walking dead. I didn't see the TV series of the same name, but that must have been interesting to have lasted for so many seasons. I see The Walking Dead is into it's final season, just like TRS.




TRS's share price hasn't been good. That's obvious. But as a business it's quite good. Not remarkably great... but for an Australian retailer it's quite impressive.


----------



## bigdog (21 November 2018)

XMAS sales approaching!!

Thank you luutzu for making me aware of

I hold and TRS was included in my 2018 yearly tipping comp.






ASX ANN
21/11/2018 9:32:14 AM  Intention to Make Takeover Bid


----------



## Clansman (21 November 2018)

luutzu said:


> Takeover offer at the low, low price of $2.70.
> 
> TRS is worth a whole lot more than that. At least $5.00, and a lot more if the holding is longer (for when the retail condition "normalises").




No it isn't. It's struggling in an environment it should be excelling in. It will go, if not after the first offer, but definitely the 2nd, which won't be anywhere near the figure you are talking about.


----------



## luutzu (21 November 2018)

Clansman said:


> No it isn't. It's struggling in an environment it should be excelling in. It will go, if not after the first offer, but definitely the 2nd, which won't be anywhere near the figure you are talking about.




All retailers are struggling, so in the sense that sales are down, will remain down... yes TRS is struggling. 

But its margins, costs are pretty well controlled. It's not losing money. Its net operating cash flows is some $34m last year, averages about $33m per year past few years. 

With some 100 stores due to renewing their leases this FY19... those that's doing poorly will be exited with minimum expenses. i.e. no need to just stick around because the lease says you have to. Play around with stock level etc., and things won't be as bad.

Sure, sales volume will likely drop... but that's business. With zero debt, 1/3 of the stores can be shut down if management decided they need to pull back a bit during the downturn. Not likely to go broke or lose money, just making less of it.

Inventory level rises, but putting that into context, it's quite normal with the increased sales. So a 1 percentage point increase in inventory/sales... With inventory to sales at 13%, to current asset at around the historical average of 80s... Not desperate situation at all. 

You can see this in it not permitting laybys or other delayed payment incentives to move stocks and increase sales. DickSmith, and other struggling businesses, would do these kind of stuff when they're struggling.


----------



## luutzu (21 November 2018)

Clansman said:


> No it isn't. It's struggling in an environment it should be excelling in. It will go, if not after the first offer, but definitely the 2nd, which won't be anywhere near the figure you are talking about.




As to the TO price... it's a joke. 

IF the board of TRS recommend that, they'll be sue. 

$2.70 for a company with some $0.51 in cash [about $14m], with NTA at $5.23... This is not a company in dire financial distress. You can't pay half the price of its assets, get all the infrastructure and IP etc. for nothing. 






btw, you can download this research from my little app for free. 

I've also put up other retailers you can get for free to compare against.

It's currently in beta mode. So some link might not work. But the main module are all good.


----------



## Clansman (21 November 2018)

luutzu said:


> As to the TO price... it's a joke.
> 
> IF the board of TRS recommend that, they'll be sue.
> 
> ...




No thanks, I don't need an app to know that this will fly in the way that I said. $5 is laughable.
Watch it go for nowhere near that.


----------



## luutzu (21 November 2018)

Clansman said:


> No thanks, I don't need an app to know that this will fly in the way that I said. $5 is laughable.
> Watch it go for nowhere near that.




Why would $5 be laughable?

With some 30m shares, that's $150m. 

Sales of $800m. Free cash flows some $40m; operating cash some $30m; reported profit some $15m. Zero debt, reasonable margin for a retailer. etc. etc.

No one, and no app, knows how (a few) market participant will appraise any business... but if you have a business of similar qualities, you can sell them to me for the equivalent prices at any time.

Geez man, takes out the cash TRS has at the bank.. the offer price is ~$2.20, or $64m. With net operating cash of $30m+ per year, you're practically guaranteed your return in about two years. 

Of course no one can predict takeover offers, or know the extend of any potential downturn coming up. I'm not pretending that I can predict and all that... but honestly, if you took a look at TRS accounts and were not the least interested...


----------



## galumay (21 November 2018)

Looks like a lifeline for any punters unlucky enough to be caught holding. Take it and run!


----------



## luutzu (21 November 2018)

galumay said:


> Looks like a lifeline for any punters unlucky enough to be caught holding. Take it and run!




I'm betting that the eventual offer will be no less than $5. Not by this clown maybe... but it shouldn't go for less than that.


----------



## Clansman (21 November 2018)

luutzu said:


> I'm betting that the eventual offer will be no less than $5. Not by this clown maybe... but it shouldn't go for less than that.




If you think that, then you are even dumber than I thought. Are you going to bet $5 on that like you said about APA being bankrupt withing a year? You've no hope of ever seeing a $5 offer, it will not even have a 4 in front of it. Low $3's at best I'm afraid. It's pertinent to note that it's an all in cash offer and right now... cash is well.. you know the rest.


----------



## sptrawler (21 November 2018)

Clansman said:


> If you think that, then you are even dumber than I thought. Are you going to bet $5 on that like you said about APA being bankrupt withing a year? You've no hope of ever seeing a $5 offer, it will not even have a 4 in front of it. Low $3's at best I'm afraid. It's pertinent to note that it's an all in cash offer and right now... cash is well.. you know the rest.



One thing I've found is never knock another persons opinion, he could be the one buying the shares, you want to offload.


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## luutzu (21 November 2018)

Clansman said:


> If you think that, then you are even dumber than I thought. Are you going to bet $5 on that like you said about APA being bankrupt withing a year? You've no hope of ever seeing a $5 offer, it will not even have a 4 in front of it. Low $3's at best I'm afraid. It's pertinent to note that it's an all in cash offer and right now... cash is well.. you know the rest.




I control like diddly of TRS stocks. So I obviously cannot decide what the high and mighty will sell the entire shop for. 

Simply saying what I reckon they're worth... and over the medium term, assuming tougher trading conditions, quite a few store closures, reduced sales... TRS is still worth at least $5. 

Over the longer term, say over 5 years to 10... it's worth at least $10 even if earnings just "normalises". ie. chugging along as it has the past decade or so.

Mate, you can pull my arguments apart and laugh at it. I'm cool with that. But to just say you reckon it's this and that without any reason behind it... just doesn't add any weight you know. 

And yes, APA will need a massive bailout - bailout from the gov't or from shareholders/debtors extending terms etc.  Without it, the entire empire will collapse. I've discussed APA at length some tme ago... I do check in and out of it now and then, its constant fund raising "for growth and expansion" just confirm it.


----------



## Clansman (21 November 2018)

luutzu said:


> I control like diddly of TRS stocks. So I obviously cannot decide what the high and mighty will sell the entire shop for.
> 
> Simply saying what I reckon they're worth... and over the medium term, assuming tougher trading conditions, quite a few store closures, reduced sales... TRS is still worth at least $5.
> 
> ...




I thought you just checked in on APA from time to time to see how far wrong you constantly get it?
You need to lose the hubris because it isn't warranted. To suggest APA is a bad business and TRS is a good business is amateur hour. Ask yourself this question "Given the events of this week, without the $2.70 offer, would the TRS share price even have a 2 in front of it?"


----------



## luutzu (21 November 2018)

Clansman said:


> ...It's pertinent to note that it's an all in cash offer and right now... cash is well.. you know the rest.




Why is it pertinent about the offer being cash?

The raider isn't another retailer or publicly listed company... what else could the offer be? Hope and prayers?

I also like their offer letter. Such amateurs. 

Look TRS, you guys su[ks. Things are going to get really, really tough. Let's get your pain over with accept our generous "all cash" offer. Be glad you've found us. You welcome. 



I doubt anyone could steal candies from a 5 year old with that kind of "kindness". Look kid, you don't want this smelly, sugary lollipop. It's really bad so let me have it.


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## luutzu (21 November 2018)

Clansman said:


> I thought you just checked in on APA from time to time to see how far wrong you constantly get it?
> You need to lose the hubris because it isn't warranted. To suggest APA is a bad business and TRS is a good business is amateur hour. Ask yourself this question "Given the events of this week, without the $2.70 offer, would the TRS share price even have a 2 in front of it?"




I never said TRS is a "great" business. Just that it's not a bad business. In general, it's quite impressive for a retailer.

It's not going to grow and take over the world like Wal-Mart and such. But it's not going to collapse the way other retailers around the world has lately. So at anywhere below $5, it's very reasonable for the medium to long term investor.

APA is a ponzi. 

If you want, I can prove it to you.

And no, I haven't been wrong. Its share price was around $8 to $9 some 3 or 4 years ago when I looked into it. What's the price now? 

But that's why I don't short stocks. Not smart enough to know what scam people will pull to lift the share price.

But ey, APA's boss just said he's seeing plenty of "growth" opportunity. About $4B's worth. Better save up to take more shares to be issued soon.


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## Clansman (21 November 2018)

luutzu said:


> Why is it pertinent about the offer being cash?
> 
> The raider isn't another retailer or publicly listed company... what else could the offer be? Hope and prayers?
> 
> ...




You've got it in one. Doing that critical thinking course twice is really starting to pay dividends. If you did a 3rd time, we could really go places with your development.
You've encapsulated how things will play out almost perfectly. Just the minor oversights. You've put amateurs in the wrong place, remove the word guys and substitute there. There's nothing amateur about the offer. Xmas is coming.


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## sptrawler (21 November 2018)

If the stock is under pressure, there wouldn't be a better time to do a raid on something like the Reject shop.
Times are tough the market is scared and as Clansman says, "Christmas is coming".
What better time to pick up a shop selling low cost bling?

I think between now and the election, there will be a lot of market movement, the U.S market isn't going to be stable.
Add to that the loony political posturing over renewable energy here, and it is a recipe for chaotic markets. IMO


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## luutzu (21 November 2018)

Clansman said:


> You've got it in one. Doing that critical thinking course twice is really starting to pay dividends. If you did a 3rd time, we could really go places with your development.
> You've encapsulated how things will play out almost perfectly. Just the minor oversights. You've put amateurs in the wrong place, remove the word guys and substitute there. There's nothing amateur about the offer. Xmas is coming.




Dude, have you been following me? 'cause you're starting to scare me 

I really should have do that course a 3rd time though. But passing is alright.

Seriously, you buying or selling TRS?

If you're buying, sure, buy anywhere under $3, or lower if you can.

If you're selling... you should get to know what you're holding better. That way, you can then pull an Allensford and tell them that $2.70? Are you serious? The business is really, really bad... it's worth $1.90, tops. 

anyway, apologies if I offend. In case there's some emotional attachment to the stock and such.


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## Clansman (22 November 2018)

luutzu said:


> Dude, have you been following me? 'cause you're starting to scare me
> 
> I really should have do that course a 3rd time though. But passing is alright.
> 
> ...




If there's an emotional attachment to the stock, it's very obviously on your behalf because you're the one who has decided ( incorrectly ) that it's going for $5. I'm the one who is saying it's going to go much closer to the bid. We will see who goes closer to the pin. Judging by your posting history, it's unlikely to be you. Take some of your own advice and get to know what you're holding better so that on a forward basis you can have a better understanding of where you messed up.


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## luutzu (22 November 2018)

Clansman said:


> If there's an emotional attachment to the stock, it's very obviously on your behalf because you're the one who has decided ( incorrectly ) that it's going for $5. I'm the one who is saying it's going to go much closer to the bid. We will see who goes closer to the pin. Judging by your posting history, it's unlikely to be you. Take some of your own advice and get to know what you're holding better so that on a forward basis you can have a better understanding of where you messed up.




Dude, I'm already in the green at the current bid. Sure, not by much, but it could be a lot worst right?

Don't know man, if you think APA is a great buy at $20B+ while TRS is a lucky to go for $80m... something's not working.

Here's something I learnt in "Critical Thinking"... probably the second time round ... You gotta back up your premises and propositions with facts and evidence. Else it's just opinions.. and every hole has a few of those. 

You like cash right?







That's the sign of a good business. 
Not "great", but not struggling, not pulling scams. Just getting the cash in from operations. Uses that cash to invest and pay dividends.

Now, TRS netted $36M from its operations last year. It averages  some $30m p.a. going back to 2013. 

Except for 2012 and 2013, its operations more than enough to pay both the bills and the shareholders and capital expenditure. That's how businesses ought to be managed for their owners. Not going to them and ask for more every six months or year for "more growth opportunities".

See how after the investment [blue] activities ended in FY14, operating cash averaged higher? They call that investment bearing fruit in the business world. 

What's more. TRS had already finish its major capex last FY. This FY will see more cash... hopefully flow to shareholders. As for workers... they're being "more efficiently" rostered and so aren't going to enjoy the benefit. But that's another story.


*Returns*

Not out of this world awesome. But quite respectable. A point or two shy of WalMart in its return and operating profit on capital employed.

So not as impressive given the size and scale of WMart. But not a terrible use of capital by any mean.


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## luutzu (22 November 2018)

sptrawler said:


> If the stock is under pressure, there wouldn't be a better time to do a raid on something like the Reject shop.
> Times are tough the market is scared and as Clansman says, "Christmas is coming".
> What better time to pick up a shop selling low cost bling?
> 
> ...




Trying to work out why they're announcing the takeover when they've only gotten about, what, 2%?, of the company?

Don't think they have other companies/subsidiaries loading up.. else they would have to, by law ?, announce that right?

I'd thought that for a company with such low market cap and being pushed down this much, you would at least acquire some 10 to 15% before you'd announce your intention to take over... after the board call you in to ask a few questions. 

So maybe not a serious offer? Just something to do to raise the price of their TRS investment? BUt then they're billionaires so $80m is peanuts right?


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## aus_trader (30 November 2018)

I get the feeling this might not be the only company that may be targeted to be acquired at low prices since many companies have fallen sharply lately.

Just my opinion but I reckon this is an opportunistic low-ball bid to grab the Aussie retailer Reject Shop Ltd (*TRS*) by some private equity group Allensford. This shows there is good value in some of these Aussie stocks given the price fall.


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## Klogg (30 November 2018)

The more I think about this, the more I think luutzu is right. Perhaps $5 is a little much (or maybe I'm short sighted), but definitely something with a $4 in front of it makes sense.

When you buy TRS, you're not buying quality. We all know that. But you have a decent set of stores from which you could easily prune the worst performing ones. In fact, you get 351 stores in total.
If you look at operating lease commitments, $100m of the $300m total (5 year total) is rolling off within the year. Assuming the average lease cost per store, you get a third of stores, or ~115 stores rolling off.
Because of this you can very easily close the worst performing stores without having to payout any leases.

That would immediately uplift the viability of the company longer-term.

There are other improvements to make, but in my mind this is trading relatively cheaply. Keep in mind I haven't convinced myself enough to take a position...


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## luutzu (30 November 2018)

aus_trader said:


> I get the feeling this might not be the only company that may be targeted to be acquired at low prices since many companies have fallen sharply lately.
> 
> Just my opinion but I reckon this is an opportunistic low-ball bid to grab the Aussie retailer Reject Shop Ltd (*TRS*) by some private equity group Allensford. This shows there is good value in some of these Aussie stocks given the price fall.




Sigma healthcare is also interesting.


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## aus_trader (30 November 2018)

Klogg said:


> The more I think about this, the more I think luutzu is right. Perhaps $5 is a little much (or maybe I'm short sighted), but definitely something with a $4 in front of it makes sense.
> 
> When you buy TRS, you're not buying quality. We all know that. But you have a decent set of stores from which you could easily prune the worst performing ones. In fact, you get 351 stores in total.
> If you look at operating lease commitments, $100m of the $300m total (5 year total) is rolling off within the year. Assuming the average lease cost per store, you get a third of stores, or ~115 stores rolling off.
> ...



I haven't got a current position in TRS either just for disclosure although I have held shares in the past. My point is how opportunistic these takeover bids are at a time when the price has fallen so much. Since I don't have a position in TRS (hence don't have any emotional attachment to it), let me look at the whole situation from an outside by-stander point of view:

Companies go through rough patches in their life cycle, even some of the great ones have gone through near bankruptcies and tough trading conditions. For the long-term shareholder of a company to see their investment perform well it usually takes time since share prices don't go up a ramp. So for the patient investor *it used to be* that they can hold on during periods of share price downturns given that their company will dig itself out of the hole and come out better and stronger.

That's how *things used to be* and what's happening more and more now is that long-term investors get _shafted _ with low-ball opportunistic take-over offers by either private equity firms or by larger companies. They prey on these targets when there is a tough business conditions and share prices have rock bottomed. Then they bid at a tiny premium above that share price and put a lid on any chance for the price to recover for the loyal shareholders who might be 50% to 90% down on their investment.


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## aus_trader (30 November 2018)

luutzu said:


> Sigma healthcare is also interesting.



KGN also... My pick for the December stock tipping competition.


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## luutzu (30 November 2018)

aus_trader said:


> I haven't got a current position in TRS either just for disclosure although I have held shares in the past. My point is how opportunistic these takeover bids are at a time when the price has fallen so much. Since I don't have a position in TRS (hence don't have any emotional attachment to it), let me look at the whole situation from an outside by-stander point of view:
> 
> Companies go through rough patches in their life cycle, even some of the great ones have gone through near bankruptcies and tough trading conditions. For the long-term shareholder of a company to see their investment perform well it usually takes time since share prices don't go up a ramp. So for the patient investor *it used to be* that they can hold on during periods of share price downturns given that their company will dig itself out of the hole and come out better and stronger.
> 
> That's how *things used to be* and what's happening more and more now is that long-term investors get _shafted _ with low-ball opportunistic take-over offers by either private equity firms or by larger companies. They prey on these targets when there is a tough business conditions and share prices have rock bottomed. Then they bid at a tiny premium above that share price and put a lid on any chance for the price to recover for the loyal shareholders who might be 50% to 90% down on their investment.




too true.

A bit tough buying at reasonable prices, watch the thing drop like a rock... then some opportunists come along to sweep it all up, locking in your losses. 

Then there's RCR Tomlinson where it looks like the bankers and lenders hint at extending loans if only they'd raise extra equity. Then oppss... let's just take the new cash and bankrupt the bastards. 

But then there are also cases where I've waited a bit to bottom feed, thinking that things might get worst and so no rush... then they got an offer or the market quickly rerate fo rno apparent reason. 

Lots of luck in this game when I think about it.


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## mcgrath111 (27 December 2018)

Having a quick look at TRS and noticing NTA at 5.23 (Comsec figures, so off by 5-50% - Also can the s*** TRS sells be classified as assets?)

In all seriousness, i'm tending to agree that another offer will come for TRS, I'm more conservative and say $3.20 - $3.50 range), yet still a bit of upside from today's $2.73) 

It's a crap company and not a stock I hold, yet it's damn tempting. As Klogg mentioned, the network of stores is huge! - I have no doubt PE could rip the guts out of this and bring it back to market at $4.50


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## bigdog (9 January 2019)

ASX Announcement
3/12/2018 9:10:26 AM *Supplementary Bidder's Statement*

"THE REJECT SHOP DIRECTORS UNANIMOUSLY RECOMMEND THAT YOU REJECT THE OFFER"

This document reports fifth reason on page 3 and perhaps a VG reason to not accept!!















816


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## Clansman (9 January 2019)

I have a strong suspicion one of the next announcements out of TRS will have the phrase " in the absence of a superior offer" in it.


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## luutzu (10 January 2019)

Allensford will either have to drastically raise their bid from the current low-ball, I'm screwing with you, price or else someone else will take it from them.

They'll soon learn to not be so greedy. People aren't stupid. I mean, telling TRS shareholders that the business is terrible but they really wanted it... seriously? Have they workshopped that strategy or got it from watching kids playing?

Here's something interesting... Seeing how it's unlikely that TRS is going broke, even under the current/coming retail crunch. As a going concern, over the medium term TRS is worth at least $6.89... that would give investors, on average, an 8%p.a. return. 

Unless everybody shops online for everything... and Australia does have the internet for a couple decades now... TRS have shown they could manage their earnings surprisingly quite steadily.

At $6 to $7 for that 8%p.a. returns folks. 



If I'm a chartist, and I guess I kinda am seeing how I can read charts better than tables...

Noticed how for every year since 2013... whenever the earnings slide or gain, the algo's valuation and the market's pricing goes the same way?

Except for FY 2018 where the business performance goes up but the market price goes down. 

So either today's market can see the doom that's coming a year ahead, or they're behind the curve. And this curve they really shoot through the floor post the FY18 results release. 

The Xmas season might be as anticipate, but the market might see that things aren't that desperately bad.








For historical comparison, below is The Washington Post.

Buffett bought all his ~10% in it by mid 1973.

According to Buffett, the stock was depressive and he got in at about $100m cap when it ought to be some 4 to 5 times that. 

Business improves after he got in but still the market price drop [note the orange arrows going down].

I think Kay Graham bought stocks back and also split it couple years after Buffett bought... but share price picked up.


So if we believe that analysts are generally brilliant forecasters, or they're missing the actual company's results and tar TRS with the general retailing environment at the moment.


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## sptrawler (10 January 2019)

One would think the post Christmas results, will give an indication of how the business is travelling. 
I haven't noticed a change in customer traffic, at the two that I walk past on a regular basis.


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## Clansman (10 January 2019)

..... No they won't.


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## Clansman (10 January 2019)

luutzu said:


> Allensford will either have to drastically raise their bid from the current low-ball, I'm screwing with you, price or else someone else will take it from them.
> 
> They'll soon learn to not be so greedy. People aren't stupid. I mean, telling TRS shareholders that the business is terrible but they really wanted it... seriously? Have they workshopped that strategy or got it from watching kids playing?
> 
> ...





They are screwing with you..... but not in the way you think.


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## luutzu (10 January 2019)

sptrawler said:


> One would think the post Christmas results, will give an indication of how the business is travelling.
> I haven't noticed a change in customer traffic, at the two that I walk past on a regular basis.




Same same as a year ago Homer?

I saw a couple nearby and thought it's busy enough. They weren't empty... and the larger one in the bigger centre was quite crowded, but that could just be the timing.


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## luutzu (10 January 2019)

Clansman said:


> ..... No they won't.




They won't raise the price?

You might be right there. 

and that's why they'll lose this battle.


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## luutzu (10 January 2019)

Clansman said:


> They are screwing with you..... but not in the way you think.




Please explain.

I can't remember any case where a down stock got a takeover offer that failed doesn't go back up again. 

Analysts and the market tend to take a closer look and figured there might be something in it. But then that could be just me talking.


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## Clansman (10 January 2019)

luutzu said:


> They won't raise the price?
> 
> You might be right there.
> 
> and that's why they'll lose this battle.




Let me guess, you're going to punt $5 on them losing the battle?? Lol


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## luutzu (10 January 2019)

Clansman said:


> Let me guess, you're going to punt $5 on them losing the battle?? Lol




Battle already lost before it even began.

There are smart people out there. Some of them have money too. 

You think they wouldn't outbid Allensford for TRS? 

You try buying an established retailer with strong balance sheet, $800m in sales for... yah, for $80m. 

Forget the franking credits, the brand, the warehouse and logistics... one could earn a fair chunk of change just shifting the payables a week or two back on that kind of revenue.


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## Darc Knight (10 January 2019)

There seems to be certain people who just like to argue, bait and taunt Luu. It's amazing, they get politely proven wrong but still choose to taunt and bait. I'll bet these idiots haven't seen a tenth of the hardship Luu has, yet probably aren't a tenth as compassionate and good hearted as him.
I'll leave it there as this is supposed to be a civil forum.


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## bigdog (11 January 2019)

https://www.livewiremarkets.com/wires/the-riddle-of-the-reject-shop

* The Riddle of The Reject Shop *





Jeffrey Tse View the contributor's profile page
Forager Funds
9th January, 2019

Do you remember the first time you visited a dollar store? For me it was an exciting stop after school. My weekly pocket money felt like a fortune. I converted it into a Swiss army knife, a cap gun and an assortment of snacks. There are fewer genuine dollar stores today but the discount variety store concept is still around, mostly in the form of The Reject Shop (TRS).

Its shareholders are now considering a cash takeover offer at $2.70 per share, valuing the business at not much more than its franking credits balance. Ten years ago shares changed hands for $10 each. Same store sales were growing at an average of 7.4% a year. Returns on equity were 50%. Where has The Reject Shop gone wrong?






*American and Canadian Success Stories*
Some international discount variety retailers have performed extremely well over that same period. Dollarama (TSEOL) operates a network of 1,192 stores throughout Canada. Same store sales grew at an average of 6% a year over the last decade and the business is valued at $12.6bn. To put that into perspective, the market values a Dollarama store at sixty times as much as a Reject Shop store.

Dollar Tree (NASDAQLTR) and Dollar General (NYSEG) in the US have large and growing store networks of fifteen thousand each. Both grew same store sales at an average of 4-5% a year over the last decade. Together, these two businesses are worth a combined $81bn.

These examples demonstrate that the concept can thrive under the right conditions. But a closer look at their business models highlights the importance of clear price leadership and a unique customer proposition.

Dollarama has a much lower lease and wage cost base compared to The Reject Shop. It sources its products directly, cutting out the cost of the agent and providing control over product design. Its value merchandise seems to resonate with the customer base. Just look up “Dollarama haul” on Youtube and see if you can scroll through all the videos of people proudly showing off their newly purchased wares. The business spends nothing on advertising.

The US success stories also carved out positions as price leaders with a unique customer proposition. Dollar General focused on providing discount consumables to rural towns with populations too small to attract investment and competition from Walmart. Dollar Tree sells everything at a fixed $1 price point which has proven to be a compelling offering, even for middle to higher income consumers in urban and suburban areas.

*The Riddle of The Reject Shop*
The North American success stories provide market leading prices and a distinct shopping experience. The Reject Shop has been unable to execute as successfully despite numerous adjustments in strategy and leadership changes. Different store layouts, price points and merchandising mixes have been tested and failed.

But the number one problem is that its products simply aren’t that cheap. Most items are available at similar prices at Aldi, K-Mart, Target and even Coles and Woolworths. The treasure hunting experience is less satisfying without the payoff of a striking bargain.

Parallel importing of branded fast moving consumer goods could be the last vestiges of The Reject Shop’s competitive advantage. Rather than purchasing directly from the manufacturers, it procures indirectly from an agent based in another country. This avoids the discriminatory pricing applied to Australian retailers such as Coles and Woolworths.

*Will The Reject Shop still be around in 10 years’ time?*
Still, $800m of revenues is nothing to sneeze at. It’s still the first place I go whenever I need a last minute Halloween or Christmas accessory and $2 is a great price point for a tub of Pringles.

At its core, The Reject Shop has a unique proposition to work with and experiences internationally demonstrate that the discount variety retail concept can thrive under the right conditions. But plenty of discount variety retailers have gone bust.

For The Reject Shop to survive if competition continues to whittle away at its value proposition, it may need to shrink or relocate stores away from large discount grocers and discount department stores. This will be difficult with $296m of operating lease commitments. A small decline in sales can easily wipe out profits given the large fixed cost base.

For The Reject Shop to thrive, a more significant transformation would have to take place. There may be an optimal merchandising, pricing and layout strategy that management have yet to figure out.

Shareholders, though, don’t have the luxury of time. They have to choose between a certain but lowly $2.70 now, or a turnaround strategy that might never come. I’ll keep dreaming about the good ole’ days.


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## bigdog (15 January 2019)

*ASX ANN
14/01/2019 4:07:30 PM  Trading update*






*ASX ANN by Allensford
14/01/2019 5:37:15 PM  Variation of Takeover Bid to extend takeover date to Feb 6





Herald Sun reported today



*


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## notting (15 January 2019)

You wouldn't want a downbeat 'forecast' after the bidders walk with a slightly less 'audited' result!


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## bigdog (16 January 2019)

Todays Herald Sun article


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## Clansman (16 January 2019)

Allensford hold all the cards here. Without the bid, the stock was at a 14 year low and heading well below $2 . If it's pulled, there is only 1 place this is going and it's down.


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## luutzu (16 January 2019)

bigdog said:


> Todays Herald Sun article
> 
> View attachment 91373




He's bluffing, and lying. Understandable, but still bs.

One, if they're serious about "informing" shareholders so they can make the correct decision, why then extend the offer to two weeks before the formal results release?

Isn't that just trying to frighten shareholders to get out before the potentially bad news hit home? 

Two, if the business is so terrible, why the heck is he getting in on all of it?

Let say that TRS have a really bad year; will continue to suffer next few years... It just disrespectful of people's intelligence that it's so bad you want all of it. I mean, come on man. We're all kids here or what?


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## luutzu (16 January 2019)

Clansman said:


> Allensford hold all the cards here. Without the bid, the stock was at a 14 year low and heading well below $2 . If it's pulled, there is only 1 place this is going and it's down.





Allensford is holding 2% odd. That's not a full deck. They're begging to want more and so far ain't getting it.

Let me know when it goes below $2.


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## Clansman (16 January 2019)

luutzu said:


> He's bluffing, and lying. Understandable, but still bs.
> 
> One, if they're serious about "informing" shareholders so they can make the correct decision, why then extend the offer to two weeks before the formal results release?
> 
> ...




I'm surprised you're so confused about whose bluffing?? Lol
The guy with all the cards doesn't need to bluff.


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## luutzu (16 January 2019)

Clansman said:


> I'm surprised you're so confused about whose bluffing?? Lol
> The guy with all the cards doesn't need to bluff.




What cards does Germinder have?

He's an opportunist. That's good for him. But good luck convincing others, beside you of course, to hand over their shares because the company has a bad year.

From its FY18 report, the top 20 shareholders own 58.26% of TRS.

Not to insult retail investors who might not be paying much attention and could possibly be frightened into selling out into the lowest share price in 14 years [i.e. selling at a loss]... It's going to be a tough ask to get them fund managers and "sophisticated" investors to unload their holdings at a loss and on a stunt like "it's really bad, sell it to me" tactic.

Imagine if I'm one of those major holders and this douche came into my office, wake me up from my coma, and telling me the business is so bad I should sell it to him at a loss. 

Yah OK.


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## luutzu (16 January 2019)

notting said:


> You wouldn't want a downbeat 'forecast' after the bidders walk with a slightly less 'audited' result!




It would be pretty easy for TRS management to legally manipulate sales performance. I hope they don't do it, but seeing how their jobs and bonuses is at stake, I wouldn't put it above them.

I mean, they could just sign up to AfterPay and such. Give loyal members 30-day credit on purchases. Lay By. Promotions, discounts. 

As far as I know, TRS haven't done any of that.

They can start now and not only would it move products, increasing sales, book higher than expected profits... The risk isn't much as it's a blank slate now. ANd if it were to become bad, it'll be the new owner's problem in six to twelve months time anyway.


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## Clansman (16 January 2019)

luutzu said:


> What cards does Germinder have?
> 
> He's an opportunist. That's good for him. But good luck convincing others, beside you of course, to hand over their shares because the company has a bad year.
> 
> ...




So you would have us believe that $18 to $2 in 6 years is just 1 bad year???
As far as convincing goes, it would seem looking at the trajectory of the SP... they were already convinced. Douche..


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## luutzu (16 January 2019)

Clansman said:


> So you would have us believe that $18 to $2 in 6 years is just 1 bad year???
> As far as convincing goes, it would seem looking at the trajectory of the SP... they were already convinced. Douche..




Did the stock float at $18? 

Has its share price been averaging $2?

No and No.






So... the price an average long-term investor would have entered into would be around $8 to $9?

If we're not in a credit tightening period with high personal debt, slow retail, bad sentiment against the sector... what would TRS normal earnings be? What would its share price be?

Still $2?

It's still a profitable business. Has practically zero debt. High cash flows. Sales at $800M [that's close to $1 billion]... and you reckon the current $65m price is pretty good. [yes, it's $65 after you take out the cash at its bank].

Here's something for future references...

A business doesn't need to "grow" to be worthwhile. It just need to remain profitable and its sales and position strong enough it won't go broke.

At a certain price, a "no growth" business is still a damn good investment. 

And in case you can't see what I'm on about, just ask yourself why in the heck does a billionaire businessman is so keen on acquiring this piece of crap at current prices. 

No, not so he can lose money. Maybe he's doing us all a favour, probably.


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## Smurf1976 (16 January 2019)

luutzu said:


> just ask yourself why in the heck does a billionaire businessman is so keen on acquiring this piece of crap at current prices.



If a billionaire wants to buy something then one thing's for sure. 

It's true value is, in their opinion, higher than they are offering. 

They wouldn't have become a billionaire if that wasn't how they operate.


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## luutzu (16 January 2019)

Smurf1976 said:


> If a billionaire wants to buy something then one thing's for sure.
> 
> It's true value is, in their opinion, higher than they are offering.
> 
> They wouldn't have become a billionaire if that wasn't how they operate.




Exactly, right?

By the look of it, I don't think these guys had a sit down with proper adult supervision on how to approach this takeover.

I mean, it's one thing to slowly load up from traders or investors who doesn't have the patience to wait for a turn around. But to go all in with scar tactics and low ball, making it out as though they're doing us a favour... jezz man. Even I know not to fall for that.

Recall how Kerry Packer float Nine for some crazy hundreds of million. Then bought it back for nothing. And that's before he met Alan Bond.

From Paul Barry's Rise and Rise of Kerry Packer... what the goana did was quite brilliant.

So he made very good money floating Consolidated Press, which contain Channel Nine. Being the biggest holder he practically run and own the thing. 

But instead of paying dividends etc., he decided business is pretty bad. No divvy, no nothing. Sales aren't good either etc. etc.

Fund managers who knew he's playing them eventually gave in because they can't stand watching the stock price going nowhere. 

So he took it off their hands. For next to nothing.


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## luutzu (27 January 2019)

I'm going through Monadelphous' old annual reports and picked up something that might be relevant to TRS' management thinking right now.

In 2000, MND was having its 7th consecutive years of good growth and profit. Management see that business is slowing down, they've been predicting this a couple years before...

But with high level of franking credits and little debt, strong cash flow...

They decided to increased the year's dividend by 48%. Reinstate the DRP.

This serve three purpose... one is to preserve cash for the difficulties they see coming; two, get rid of the franking credit, handing it over to investors... three, the DRP will also mean long-term investors can buy more shares in the company for a whole lot less.

The Reject Shop, according to their statement, has $53M in franking credit, or some $1.85 per share.

With barbarians knocking at the gates, this should remove the hidden value, the increased dividend possibly raise the share price, and long term shareholders will be happier supporting current management.

Just a guess of course.


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## bigdog (20 February 2019)

ASX report today






https://www.insideretail.com.au/new...-the-reject-shops-profit-in-first-half-201902

*Negative same-store sales weigh on The Reject Shop’s profit in first half*
February 20, 2019

Discount variety store The Reject Shop booked $10.6 million in net profit after tax in the first half of FY19, around 40 per cent less than the $17.7 million of profit it posted in the previous corresponding period, which was in line with its guidance.

Comparable sales were down 2.6 per cent over the half, which the business said reflected the difficult trading environment in September, October and November.

“This has been an extremely challenging period to be operating a retail business and the retail sector as a whole has felt the impacts of lower consumer confidence, flat wages, changing spending patterns and the rise in energy costs,” The Reject Shop managing director Ross Sudano said.

“The Reject Shop has not been immune from these factors… [However], we were extremely pleased to deliver strong performance in the Christmas trading period, which is the most important trading period of the year for The Reject Shop.”

Sudano said the team is in the final stages of its “Brilliant Basics” change program to drive future growth, which contributed to a 0.2 per cent rise in comparable sales in December.

This increase was short-lived, with comparable sales down 2.8 per cent in the first seven weeks of the second half of FY19. The business expects to see net loss of between $6.5 and $7.5 million in the second half of FY19.

“This means the updated full year NPAT guidance range is $3.1 million to $4.1 million,” Sudano said.

The Reject Shop chairman William J Stevens took the opportunity to address the “unsolicited and inadequate” take-over bid made by Allensford Pty Ltd, once again urging shareholders to reject the offer.

“Allensford questioned the basis for the profit guidance and they questioned how The Reject Shop could maintain guidance in the face of November sales,” Stevens wrote in a statement to shareholders.

“With guidance now met, and from the result of actual sales, Allensford’s speculation has proven to be unfounded.”

The takeover offer was previously extended into March to shareholders time to consider the company’s first-half results before making their decision.

“The outlook for retailers continues to worsen and like-for-like sales for most retailers has been challenging,” Allensford director Nick Perkins said.


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## Clansman (20 February 2019)

Clansman said:


> I have a strong suspicion one of the next announcements out of TRS will have the phrase " in the absence of a superior offer" in it.




Going exactly as expected.


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## luutzu (20 February 2019)

Clansman said:


> Going exactly as expected.




How does:
Stevens': "With guidance now met, and from the result of actual sales, Allensford’s speculation has proven to be unfounded.”

In any way "exactly as (you) expected": "In the absence of a superior offer"?


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## Clansman (25 February 2019)

No calvary coming for this mob.
In the words of Fleetwood Mac.

If your life was bad to you, 
just think what tomorrow will do.


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## bigdog (26 February 2019)

ASX  Ann today

_________________________________________________________________________________
On-market takeover offer by Allensford Pty Ltd as trustee for the Allensford Unit Trust for all of the shares in The Reject Shop Limited (ACN 006 122 676)

Allensford notes that its on-market takeover offer for The Reject Shop Limited will close at 4:00pm (Sydney time) on Tuesday 5 March and will not be extended further. Until this time, TRS shareholders are able to sell their TRS shares to Allensford for $2.70 in cash, realising certain and immediate value for their shares.


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## Smurf1976 (28 February 2019)

So at this point is there any expectation that the offer will actually be extended or changed in some way?

Or is that the offer closes and whatever % of the company they've got is where they'll leave it?

Or they get enough to then proceed to compulsorily acquire the rest?

I don't hold, just interested.


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## aus_trader (4 March 2019)

Smurf1976 said:


> So at this point is there any expectation that the offer will actually be extended or changed in some way?
> 
> Or is that the offer closes and whatever % of the company they've got is where they'll leave it?
> 
> ...



With deadline tomorrow, I don't think Allensford has enough stake to proceed to compulsory acquire the company. They currently have around 5%.

I think the bidder has to have around 50% before they can compulsorily acquire the rest of a company.

It'll be interesting what happens tomorrow, either extension of the offer or expiry which will impact the share price which has been stuck in the $2.70 area since November last year.

I also don't hold TRS.


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## luutzu (4 March 2019)

aus_trader said:


> With deadline tomorrow, I don't think Allensford has enough stake to proceed to compulsory acquire the company. They currently have around 5%.
> 
> I think the bidder has to have around 50% before they can compulsorily acquire the rest of a company.
> 
> ...




From memory, and this was years ago, compulsory when at 90%.


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## luutzu (4 March 2019)

Smurf1976 said:


> So at this point is there any expectation that the offer will actually be extended or changed in some way?
> 
> Or is that the offer closes and whatever % of the company they've got is where they'll leave it?
> 
> ...




I hold.

My thinking is that they might have made a mistake in announcing the offer when they barely got 3% of  TRS, thinking they'll easily get a whole lot more paying some 20% "premium" on the then $2.40 or so per share.

That obviously didn't work out as they'd hoped so with tomorrow's expiration, they'll call it quit. BUT...

In calling it quit they're hoping that the price will crash... then they would either quietly scoop up then make another offer some time down the track... just to help us from ourselves and such.

I hope it does crash 'cause I got a few bucks and not afraid to use it.


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## aus_trader (4 March 2019)

luutzu said:


> From memory, and this was years ago, compulsory when at 90%.



I thought to look it up luutzu, since I am not sure what it currently is and I haven't had any of my holdings going to compulsory acquisition in a take over recently. The government website "www.takeovers.gov.au" says the following:

""
*Compulsory acquisition *
A bidder under a takeover bid11 may compulsorily acquire any remaining securities in the bid class if during, or at the end of, the offer period, the bidder and their associates have:

relevant interests in at least 90% (by number) of the securities in the bid class and
acquired at least 75% (by number) of the securities that the bidder offered to acquire under the bid.
""


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## Clansman (20 March 2019)

Look out below


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## bigdog (16 October 2019)

ASX announcment today
16/10/2019 8:25:10 AM AGM Address to Shareholders (including trading update) (PDF 190.3 KB)  16/10/2019 8:24:50 AM  Trading Update (PDF 111.7 KB)

This morning the struggling retailer revealed that its performance has improved since the end of FY 2019.

During the first 15 weeks of FY 2020 the retailer’s comparable store sales are up 0.3% over the prior corresponding period. This compares to a 2.5% decline during the second half of FY 2019.






010


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## sptrawler (22 October 2019)

The share price is still climbing post AGM, is it a turn around, or a dead cat bounce?

https://www.asx.com.au/asxpdf/20191016/pdf/449jqt760sxz06.pdf


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## bigdog (22 October 2019)

DCB

Will need miracles to occur!!


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## aus_trader (2 December 2019)

Pick for the December Stock Tipping competition. The stock is severely hammered and hoping for a short term bounce cheered on by some better sales numbers for the month of December due to Christmas shopping spree...


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## aus_trader (29 March 2020)

Given the current lock down environment where everyone is trying to save a few bucks with their shopping, I think reject shop is likely to continue to attract sales. They have a lot of everyday items at a discount to the prices offered by the major supermarkets.

Price is hammered but may head higher as sales numbers get reported...


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## mangojoe (10 April 2020)

An Article with a deeper positive look into the business from Mar 9, 2020

https://www.afr.com/companies/retail/reject-shop-s-plan-to-shrink-back-to-greatness-20200305-p547cc

And another:

_From the 16th to the 22nd of March 2020 sales at The Reject Shop’s 354 stores were up 36.1% year-on-year._

https://www.channelnews.com.au/the-reject-shops-sales-up-36-in-the-past-week/


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## mangojoe (30 April 2020)

Was the 16% increase yesterday due to this notification?
https://www.asx.com.au/asxpdf/20200427/pdf/44h85dc420qrfv.pdf

If so, could someone explain a newbie why it caused such big jump?

Notification of issue, conversion or payment up of equity +securities
150,000 performance rights issued under the Company’s performance rights plan -​
Employees can get stocks I guess as part of their salary package, is it?

In any way, happy I doubled down the day before


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## finicky (19 June 2020)

*TRS* @ $7.70

The underwriter, Ord Minnett and sub-underwriters have made a bomb from the TRS entitlement raising in March. Over 60% of the new shares @ $2.70 were not taken up by shareholders and went to underwriters. The Reject Shop at a 52 week high and, effective June 21 rebalance, will re-enter the All Ords.

Hold 1,000 shares
Will sell in new financial year

6 Mth Dly


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## bux2000 (27 June 2020)

I looked at TRS when I first started spending the Kids inheritance and it appeared OK but not that flash. Every time I now open  Incredible charts, up flashes TRS as the default chart and I think ....if only, but surely it cannot keep going up apparently unabated. 

I am not usually aware of divine intervention .........but admit I am starting to reconsider

I know Simply Wall St algorithms can be very misleading but with a valuation of $141......well how wrong was I.

bux


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## systematic (31 December 2020)

TRS currently remain a buy recommendation from various brokers, and has seen a few director buys over recent history. 
They look like they might do well if the consumer dollar becomes more budget conscious into 2021


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## sptrawler (31 December 2020)

Page 7 of this thread is interesting reading, shows that good robust debate usually ends up with a reasonable prognosis.
It's a shame Luu left the forum, he was a great contributer.


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## Trav. (2 January 2021)

TRS popped up on a scan and looks interesting, daily chart below and will be interesting if it holds a break > $7


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## bux2000 (13 March 2021)

TRS is an interesting chart anyone got any thoughts.

Thanks
bux


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## Wilham (13 March 2021)

bux2000 said:


> TRS is an interesting chart anyone got any thoughts.
> 
> Thanks
> bux
> ...



Might just be me, cant view the link?


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## Knobby22 (13 March 2021)

bux2000 said:


> TRS is an interesting chart anyone got any thoughts.
> 
> Thanks
> bux
> ...



There's been a change of management and the stores are being modernised. Could be a turnaround story.
Retail though and plenty of competition. Unsure.


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## peter2 (13 March 2021)

*TRS* is trading in a huge two dollar range ($8 - $6). If price breaks down through the $6 support level. I'm not interested. Price has bounced off the $6 level twice already and that's the current trade opportunity for me on this chart.


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## bux2000 (14 March 2021)

peter2 said:


> *TRS* is trading in a huge two dollar range ($8 - $6). If price breaks down through the $6 support level. I'm not interested. Price has bounced off the $6 level twice already and that's the current trade opportunity for me on this chart.



Thanks everyone for your thoughts I bought a small position on Friday at $5.91  with a stop loss at $5.75.
Just hope I have not given it the commentators curse 

Can I ask you Peter which charting software you are using please.

Thanks again
bux


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## peter2 (14 March 2021)

I use two but the one I post most often is Bullcharts (Aussie software).


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## bux2000 (14 March 2021)

Thanks for that Peter, along with the sharing of your thoughts, trades, and insights, I appreciate it all.

All the best
bux


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## Dona Ferentes (21 August 2021)

TRS  lifted earnings in the year to June, but there was no joy for shareholders. While the company declined to issue any guidance for 2021-22, it did warn of higher shipping costs over the foreseeable future which will out pressure on inventories and prices and margins.

Net profit jumped 643% to $8.3 million despite the company’s sales falling 5.1% to $778 million as ongoing lockdowns hurt sales.

Cost cutting helped lift earnings by pressing down on costs as the company’s revamp continues under newish managers. The Reject Shop said it cut its cost of doing business for the year by $22.5 million for the year, largely through fewer staff and cheaper rents.

But these efforts were partly undermined by an unexpected $9 million the business had to spend on higher *international shipping costs*. The Reject Shop has factored those costs into the new financial year, but warned investors they* continue to increase* each month.


> “_The Reject Shop turnaround is progressing as expected despite operating in a very uncertain and challenging macro environment_,” CEO Andre Reich said on Thursday.





> “_COVID-19 lockdowns continue and have occurred in every State in which we operate, having a significant impact on customer behaviour. International shipping rates have increased significantly over the past year and appear to be remaining elevated during 2021,_” he added.





> _“I am hopeful that customer shopping behaviour will normalise once broader concerns around COVID19 reduce and more of the community are fully vaccinated._”




Import model under stress.


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