Reject Shop shares ravaged after revealing soft September quarter

Reject Shop shares have tanked a further 15 per cent to a 14-month low, after it revealed soft trading data yesterday.

The Reject Shop chief executive Ross Sudano.

Shares in The Reject Shop have plunged as much as 15 per cent to a 14-month trough as investors continue to shun the group after a dismal trading update yesterday.

The discount retailer (TRS) told investors on Wednesday it would struggle to match fiscal 2016’s first-half result after a soft September quarter.

“Given this current trading momentum, we face a challenge in respect to achieving last year’s half year result,” chief executive Ross Sudano said.

“Achieving last year’s result will be dependent on success in our current plans and on a change in momentum in our comparable sales growth in the second quarter.”

The update wiped 6.8 per cent from its shares on Wednesday, with the nosedive extending through Thursday as its shares tanked 13.2 per cent to $7.64 by 1pm (AEDT).

Over the two-day period the company has seen its market value hacked by more than $50 million.

It prolongs a harrowing period for the group, which has seen its market capitalisation halve in value from around $440m since August 22.

Analysts have taken the knife to the target price of the group in the wake of the sales activity, although stopped short of trimming ratings.

UBS lowered its target price on The Reject Shop by almost 10 per cent to $12.90, but retained a ‘buy’ rating despite labelling sales momentum “concerning”.

Macquarie also slashed its target price, but retained a ‘neutral’ rating with the current price well below its forecast fair value.