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The Reject Shop’s sales remain sluggish into second half

After a blockbuster first half that saw net profit soar 46.5 per cent despite sluggish sales, The Reject Shop has said trading remained challenging through the beginning of the second half.

The company’s stores in CBD locations and large shopping centres have continued suffering compared to before the pandemic, with sales down 12 per cent compared on a 48 week period to 30 May. The remainder of the company’s store network traded up 0.9 per cent during the same period.

Taking these factors into account, the business now believes its full-year sales for FY21 will land somewhere between $776 million and $778 million, while EBIT will be between $8 million and $10 million.

And with many of these CBD and large shopping centre locations’ leases expiring in the next 18 months, several are in the process of having their leases renegotiated on this basis, and The Reject Shop intends to close stores that don’t meet its financial benchmarks.

“In general, and consistent with other retailers, [we note] that customer behaviour has tended to shift towards less frequent shopping visits with increased basket size,” the company said.

“The company believes that customer shopping behaviour will normalise once broader concerns around Covid-19 reduce and more of the community are fully vaccinated for [the virus].

“Until that time, the company will continue to navigate the short-term challenges associated with Covid-19 and management will remain focused on cost reduction.”

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