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Reject Shop share price on watch after Q1 trading update

The Reject Shop Ltd (ASX: TRS) share price will be on watch today following the release of a trading update ahead of its annual general meeting.

What did Reject Shop announce?

This morning the struggling retailer revealed that its performance has improved since the end of FY 2019.

During the first 15 weeks of FY 2020 the retailer’s comparable store sales are up 0.3% over the prior corresponding period. This compares to a 2.5% decline during the second half of FY 2019.

Management advised that this positive momentum has been achieved through the execution of a plan which focuses on owning everyday low prices. This plan includes offering leading branded products, great daily essentials and household general merchandise, and new exciting products which are refreshed regularly.

The company’s acting CEO, Ms Dani Aquilina, was pleased with the positive start to the year.

She said: “While only in the early stages of our turnaround, I am pleased to communicate a return to positive comparable sales. Our customers are responding positively to the changes that we are making, which re-engages with the company’s core DNA.”

“We have further work to do to provide our customers with the range and customer experience that they desire. However, I am confident, that we have fundamentally repositioned the company with a clear strategy that will deliver improved performance. We encourage all shareholders to shop with us, particularly in the lead up to Christmas, and watch as our changes unfold,” she added.

Reject Shop also provided an update on its search for a new CEO. It advised that the selection process is well advanced, with a further announcement expected in the next 6 to 8 weeks.

Should you invest?

Whilst it is good to see that Reject Shop is no longer posting negative comparable store sales, I think it is a little too soon to get excited by a 0.3% increase.

I would suggest investors wait to see how Reject Shop fares over the key Christmas and New Year period before considering an investment.

In the meantime, I think retailers such as Accent Group Ltd (ASX: AX1) and Ltd (ASX: KGN) would be better options.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Accent Group and ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.