Reject Shop shares plummet on news of CEO’s shock departure
MYSTERY surrounds the sudden departure of The Reject Shop chief executive Andre Reich, who has stepped down after about two years in the role. His departure was announced on Wednesday morning but was effective from the previous day.
Shares in Reject Shop, which have had a volatile time on the market in the last decade following a string of profit warnings and downgrades, fell almost 25 per cent in morning trade as investors reacted to the shock exit of Mr Reich.
The lack of any explanation for Mr Reich’s departure only served to further feed investor anxiety about the true reason for his departure given he had only led the discount retailer for around two years.
The Reject Shop did reaffirm earnings guidance as it announced the CEO leaving but this didn’t help steady the share price.
Mr Reich joined The Reject Shop in January 2020 and led it through a restructure and turnaround while navigating the uncertainty and volatility associated with Covid-19.
He tried to re-engineer Reject Shop stores, stripping out some poor-performing categories and putting in new goods to cater to changing customer demands, while also closing down some stores after failing to secure better rents from landlords.
Three years ago, billionaire packaging businessman Raphael Geminder bought a 20 per cent stake in the retailer, and while he failed to grab full control through a takeover, he appointed directors and helped lead a strategy change that has paid dividends.
The Reject Shop chairman Steven Fisher said on Wednesday he accepted Mr Reich’s resignation and thanked him on behalf of The Reject Shop’s shareholders, team members and customers for his contribution to The Reject Shop turnaround.
“Everyone at The Reject Shop wishes Andre well in his future endeavours and we thank Andre for the work he has done to position the company for growth. We have commenced an external search to identify an experienced executive to lead the company through the next phases of the turnaround strategy”.
In accordance with the former CEO’s contract of employment, he will receive a payment from the company in lieu of serving his six months’ notice together with any statutory entitlements. Any performance rights held have been lapsed.