Reject Shop has high hopes of new boss

The Reject Shop’s incoming chief executive, Ross Sudano, is expected to review the discount retailer’s aggressive expansion plans, product range and digital offer when he takes the helm in September.
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Mr Sudano, a former brewing and grocery executive with more than 20 years’ retail experience, will take the reins from Chris Bryce, who announced his resignation in March and left last month.

Mr Sudano, 44, joins the Reject Shop at a difficult time. The discount variety sector has been hard hit by the downturn in discretionary spending after the May budget and is grappling with structural challenges including a raft of new online and bricks-and-mortar competitors including Japanese discounter Daiso and NQR.

Last week, the Reject Shop’s largest competitor, Jan Cameron’s Discount Superstores Group, which owns about 150 Crazy Clark’s and Sam’s Warehouse stores, collapsed for the second time in less than two years.

After rapid expansion, the Reject Shop has been struggling to control costs with new stores appearing to be cannibalising sales at older ones. Key metrics including sales and earnings per store have been going backwards for four years. Commonwealth Bank analyst Sam Teeger says consumers are increasingly going to shopping centres for lifestyle reasons instead of shopping and the Reject Shop is being undercut by larger chains such as Kmart, which has slashed prices.

Analysts expect Mr Sudano, the former chief executive of craft brewer Little World Beverages and outdoor leisure chain Anaconda, to review longer-term plans for 400 to 490 stores, improve the product mix and reconsider the company’s reluctance to move online. ”Once this leadership transition occurs, we suspect the Reject Shop’s strategy will shift to improving store profitability metrics, which have been deteriorating since 2011 at the expense of the ambitious store rollout,” Mr Teeger said in a recent report.

Chairman Bill Stevens said Mr Sudano was an accomplished retailer who would bring great expertise to all aspects of the business, including merchandise buying, supply chain management, distribution, store operations, and marketing.

”Ross has clearly got very strong retail experience across a range of elements of retail including marketing, merchandising and buying, with a particular focus on customer requirements,” Mr Stevens told Fairfax Media.

”He doesn’t come to us with any preconceived notions.”

Mr Stevens conceded South African-born Mr Sudano lacked experience in discount variety, ”but based on where he’s been I don’t see that as a particular negative.

”He is certainly aware of the space and, particularly at Anaconda, had a focus on customer requirements and how to fill customer needs,” he said.

Mr Sudano’s contract includes fixed pay of $650,000 plus short-term incentives potentially worth 30 per cent of fixed pay.

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