Allensford jumps on disappointing The Reject Shop results

Allensford jumps on disappointing The Reject Shop results

Allensford is once again gunning to take over The Reject Shop (ASX: TRS) following the group's 1H19 results announcement and full year guidance.

Though The Reject Shop's half year profit was in line with expectations, Allensford is hoping shareholders will jump ship now that the retailer has announced its full year guidance.

Profit for the first half was down 40.4 per cent to $10.6 million, while sales were down 1.1 per cent to $432.7 million.

The company expects to record a loss of between $6.5 million and $7.5 million in the second half of the 2019 financial year, which means full year profit guidance will land between $3.1 million and $4.1 million.

Shareholders have also had their dividends slashed by more than half.

Allensford director Nick Perkins says these results are evidence that shareholders should accept his offer of $2.70 per share.

"The sustained deterioration in The Reject Shop's financial performance over the period and a further deceleration in sales during the first seven weeks of the second half, despite net 10 new store openings, is confirmation that the board's strategy to arrest the long-term underperformance of the business is failing," says Perkins.

The Reject Shop has blamed its low sales on "extremely difficult trading" in September, October and November. Christmas was apparently a boost for the company however.

Managing director of The Reject Shop Ross Sudano says a number of factors out of his control contributed to this disappointing result.

"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," says Sudano.

"The Reject Shop has not been immune from these factors; however, our strategy to implement fundamental change to restore the performance of the business we articulated three years ago is on the cusp of generating real returns and will begin to be reflected in the second half of this calendar year and beyond."

Sudano says the company now hopes to become a leader in the greeting cards and home storage sectors.

"Both have the capacity to be significant sales and gross profit drivers, and the initial results are extremely positive," says Sudano.

Shares in The Reject Shop are down 0.73 per cent to $2.73 per share at 12.15pm AEDT.

Never miss a news update, subscribe here. Follow us on Facebook, LinkedIn, Instagram and Twitter.

Business News Australia

Help us deliver quality journalism to you.
As a free and independent news site providing daily updates
during a period of unprecedented challenges for businesses everywhere
we call on your support

Operating the board collaboratively, efficiently and securely
Partner Content
'Digitisation' and 'digitalisation' are two words that are frequently t...
OnBoard
Advertisement

Related Stories

Myer's online sales surge 54 per cent but Omicron hampers post-Christmas performance

Myer's online sales surge 54 per cent but Omicron hampers post-Christmas performance

Although Myer (ASX: MYR) has reported a strong period of trade in t...

Demand for local travel sees Camplify flourish despite lockdowns

Demand for local travel sees Camplify flourish despite lockdowns

Despite widespread lockdowns restricting movement across Australia,...

Consumer confidence bounces back after hitting 15-month low

Consumer confidence bounces back after hitting 15-month low

Australian consumer confidence rose 2.2 per cent last week after dr...

Coca Cola offloads beer and cider brands to Yellow Tail and Peter Lehmann Wines owner Casella

Coca Cola offloads beer and cider brands to Yellow Tail and Peter Lehmann Wines owner Casella

No longer the eternal hoptimist, Coca-Cola is finally calling last ...