The Reject Shop Limited (ASX: TRS)
On 27 March 2025, The Reject Shop Limited (ASX: TRS) announced having entered into a binding Scheme Implementation Agreement with Dollarama Inc. (TSX: DOL) under which Dollarama will acquire all of the issued and outstanding shares in The Reject Shop by way of a scheme of arrangement (Scheme) at a price of A$6.68 cash per share.
On Scheme becoming effective, The Reject Shop Board intends to determine a fully franked special dividend of up to A$0.77 per share payable before the Scheme gets implemented and deducted from the Scheme Consideration.
The Reject Shop Limited, on 20 February 2025, had delivered a strong financial performance for the first half of the 2025 financial year, with notable growth in sales and profitability. The company reported sales of $471.7 million, marking a 2.9% increase from the previous corresponding period, driven by growth in both general merchandise and consumables. Comparable store sales also increased by 1.5%, with strong momentum in the second quarter, especially during the Christmas trading period.
The company’s focus on improving gross profit margin has yielded positive results, with a 125-basis point increase compared to the previous period. Gross profit stood at $196.3 million, up by 6.1%. Despite inflationary pressures, the cost of doing business remained in line with expectations. EBIT (pre AASB 16) reached $22.6 million, reflecting a 16.2% increase, while NPAT (pre AASB 16) rose by 14.6% to $16.4 million.
The Reject Shop has continued its expansion efforts, opening nine new stores in the first half and planning to open seven more in the second half. While a few store closures have been planned, these locations are considered for potential relocation. At the end of December 2024, the company’s national store network consisted of 393 stores, reflecting its strategic growth trajectory.
It maintains a robust balance sheet, with a net cash position of $74.9 million and no drawn debt. Inventory levels were slightly reduced to $143.1 million, demonstrating effective stock management. As a result of its strong financial performance, the company has declared a fully franked interim dividend of 12.0 cents per share, representing a 20% increase from the previous year.
The Reject Shop remains committed to improving its product mix, growing sales, and expanding its store network. Sales in the early weeks of the second half have continued to grow, supported by an increase in general merchandise sales and further improvements in gross profit margins. The company’s leadership expresses confidence in its ability to support Australian consumers with cost-effective product offerings while maintaining sustainable business growth.
(Source: Company's Report)
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