Friday 7 April 2017

Reject Shop Share Price Smashed

We don’t often concentrate on share prices but The Reject Shop’s share price plunge today was dramatic and the reasons will ring a bell with many GM traders at the Queen Victoria Market.

General Merchandise Traders have been talking about unusually poor trading conditions for some weeks and now one of the major Australian retailers, The Reject Shop, has reported a disastrous result for the March 2017 quarter.

The Reject Shop’s share price fell more than 35% today as the retailer revealed an expected $5m loss for the second half of the 2016/17 year. They will still make a profit for the full year but the nature of their sales decline has created rumblings within the industry.

Executives are blaming the challenging external environment and their merchandising strategy for the decline and say they have the strategy to correct the situation although it would appear the share market was not impressed. The company’s share price at the close of business yesterday was $7.92 but today it ended up at $5.11 following the announcement.

Harvey Norman Shares fell 1.84% on the news.

Have Your Say - click here.

07/04/2017 21:16 Reject Shop - "This also goes against 'conventional wisdom' which usually suggests that in difficult times discount stores do well.
I don't have the data, but most indicators I've read in recent years indicate that expensive 'exclusive' brands are continuing to report strong sales.
The tentative conclusion there is that the lower socio economic groups have pretty well reined in all discretionary spending, whilst the other group still has plenty to spend, but will only really do that with the prestigious brands.
Whichever way you look at it, were going to have to continue to battle through difficult times.
When the going gets tough..."
Thanks for your input - Ed