Portfolio Analyst, River Capital Growth Fund, River Capital

Vishal Hargovan

Portfolio Analyst, River Capital Growth Fund

River Capital

Equity Bottom-Up

With an improving outlook and a solid turnaround strategy, The Reject Shop currently offers an attractive entry point with a 37% margin of safety. Strong operating cash flow as a result of an improved working capital position and a much more muted store expansion plan going forward give us more confidence in the new management team. What gives us comfort is management are demonstrating focus on the return maximization of the existing store footprint (rather than continuing the previous aggressive roll out) through operational efficiencies and productivity improvements.&nbsp;

With an improving outlook and a solid turnaround strategy, The Reject Shop currently offers an attractive entry point with a 37% margin of safety.  Strong operating cash flow as a result of an improved working capital position and a much more muted store expansion plan going forward give us more confidence in the new management team.  What gives us comfort is management are demonstrating focus on the return maximization of the existing store footprint (rather than continuing the previous aggressive roll out) through operational efficiencies and productivity improvements.&nbsp;  

Things I liked about the Reject Shop 1H15 Result (TRS AU)