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TRS - The Reject Shop

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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
 
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.
 
updated earnings guidance of 16-17m.
I was expecting more than this but obviously the market was expecting alot less!
 
VSntchr said:
updated earnings guidance of 16-17m.
I was expecting more than this but obviously the market was expecting alot less!
Click to expand...

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.
 
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?
 

CFDs. IB also recently have a list of ASX stocks for shorting.
 
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.
 
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...
 
ROE said:
I spot another business cutting into TRS ..

Smart Dollar ...sell same stuff...
Click to expand...
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.
 
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!
 
TRS has had a great run after reporting but its starting to look abit toppy. Anybody have a technical view on TRS?
 

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...
 
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.
 
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.
 
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.
 
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.
 
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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