Reject Shop tips quick turnaround

The Reject Shop chairman Steven Fisher believes the struggling retail chain can turn its fortunes around.

The Reject Shop says demand will increase as times get tougher

The Reject Shop chairman Steven Fisher believes the struggling retail chain should be able to “make some quick gains” as it digs itself out of last year’s $17m loss, and could benefit from tougher economic times as shoppers look to stretch their budgets.

Mr Fisher said The Reject Shop wasn’t a complicated business and that with annual sales of $800m it shouldn’t be too hard to eke out a profit, although he conceded the retailer needed to do a better job on the quality of its offering and pricing.

After addressing The Reject Shop annual meeting on Wednesday in his maiden outing as chairman, Mr Fisher said the poor trading environment and low-growth economy could generate opportunities.

“I think it is an opportunity for us. I think if you go into the stores and talk to the consumer, I think they might be seeing stores like The Reject Shop as their opportunity and saviour and I think we are getting feedback that as times get tougher the opportunities we present are actually helping them,’’ Mr Fisher told The Australian.

“So I think we are counter-cyclical in that regard and I think our product that we have presented hasn’t really been the standard we would have wanted, so I think we can improve substantially.

“I think if we get our price and our offer better you’ll see a very quick turnaround because I think the structures are good, the stores are good.

“We will make some quick gains.’’

This was despite it being a crowded marketplace where competitors such as Target, Kmart and Big W were competing for the same customer.

“If you look overseas it’s even more crowded and who is doing best? People in our space, so I do think it will gravitate there.”

Mr Fisher also offered a mea culpa to long-suffering shareholders, who have seen countless profit warnings from the group and a share price that collapsed by almost 90 per cent since 2014.

“Clearly errors were made, these errors have been identified and are currently being addressed,’’ Mr Fisher said.

In August, The Reject Shop posted a net loss of $16.9m, a complete turnaround from the $16.6m profit made in 2018, as impairments of $15.4m after tax and a further slip in full-year sales savaged the company’s profitability.

In fiscal 2019 the company also revealed it had breached its banking covenants.

The shares have fallen from a peak above $17 in 2014 to as low as $1.93 more recently.