Discount giant Dollarama seeks bargain at The Reject Shop
Despite economic headwinds, there’s been no lack of activity in the local retail sector. And profit warnings from some of the country’s highest-profile brands – from Harvey Norman to Best & Less and Adairs – have not dulled interest in Australia from one major overseas retailer, Canada’s Dollarama, a Montreal-headquartered discount chain.
Sources told Street Talk that Dollarama had approached The Reject Shop, the ASX-listed discount retailer whose largest shareholder is billionaire businessman Raphael Geminder’s Kin Group. Assisting The Reject Shop with those discussions was UBS, they added.
Dollarama is one of the biggest discount chains in North America. Getty
Other major The Reject Shop investors include Bennelong Funds Management, with a 16.7 per cent stake, and Wilson Asset Management.
It has been a difficult year for The Reject Shop, with the company’s chief executive, Phil Bishop, abruptly leaving after just seven months in the job in February. The Reject Shop’s chief financial officer, Clinton Cahn, a former UBS analyst, is acting as chief executive.
Sales for the six months to December 31 were strong, however, up 3.5 per cent to around $439 million. Profits for the period rose 14.1 per cent compared to the same time one year earlier, to $16.4 million. The group was also expanding late last year, opening eight new stores and targeting another five locations in the six months to June 30. It was expecting to open 15 new stores this financial year, having closed five stores in the prior year.
It is unclear when Dollarama approached The Reject Shop, but sources with knowledge of the discussions said they continued for some time this year. Ultimately, The Reject Shop ended those discussions.
The Reject Shop shares
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