The Reject Shop Ltd (ASX: TRS) share price is slipping today after the company’s CEO noted increased shipping costs and delays, caused by the global pandemic, likely won’t abate until the middle of next year.
In a speech published to the ASX ahead of the company’s annual general meeting (AMG), Reject Shop CEO, Andre Reich states that inflated retail prices are being “managed carefully” in the face of higher shipping costs.
It’s bad news for those hoping COVID-19’s impact on businesses will end when Australia hits much-anticipated vaccine targets.
At the time of writing, the Reject Shop share price is $6.05, 1.63% lower than its previous closing price.
Let’s take a closer look at what the company’s leader noted in his AGM address.
COVID-19 disruptions continue for Reject Shop
The Reject Shop share price is down amid Reich’s comments that already inflated international supply chain costs have continued to increase in financial year 2022.
The company is facing ongoing challenges when trying to move goods through the Asia shipping lane. The shipping lane is being impacted by “several macro factors”, according to Reich. Those factors will likely continue beyond financial year 2022.
That means the company could face shipping costs that are $9 million higher than normal, as it did over financial year 2021. Or, the toll could be greater this financial year. Reich commented:
Unlike in [financial year 2021], most of these higher international supply chain costs have been factored into the company’s budget in [financial year 2022], however, they continue to increase.
The challenges might also affect the Reject Shop’s customers over the coming months. Particularly, as international shipping delays are further exacerbated once goods reach Australian ports.
That will likely lead to delays in products getting onto shelves. It could also mean in-store prices are upped to cover additional shipping expenses, as well as higher “raw material” costs.
Reject Shop share price snapshot
This year hasn’t been good for the Reject Shop share price.
It has fallen 11% year to date. It’s also 14% lower than it was this time last year.