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Global pandemic having uneven impact on retail sales

Image of The Reject Shop
Image of The Reject Shop

Discount department store The Reject Shop has posted a 15.1 per cent increase in comparable sales for the three-week period from February 24 to March 15, boosted by strong performances in its cleaning, groceries, toiletries and pet care categories.

Andre Reich, The Reject Shop CEO, said that while a significant portion of the sales growth over the last three weeks has been driven by customer concerns around coronavirus, he is pleased with the underlying comparable sales trajectory as well as the initial customer response to the improved product range.

Comparable sales for the first 11 weeks of the second half of FY20 saw a 5.7 per cent increase. As announced on February 27, 2020, comparable sales for the first eight weeks of the second half of FY20 were up 2.3 per cent.

“The Reject Shop recognises the uncertain duration of the elevated sales activity pertaining to the coronavirus and cautions against assuming that these elevated sales will continue through to the end of FY20,” the company said.

The Reject Shop confirmed that stock is starting to be received from the company’s China-based suppliers.

But not all retailers have seen such a positive impact from the pandemic.

Last Wednesday, Adidas announced it is expecting a decline in its first quarter sales by up to $1.14 billion in greater China and a decrease in operating profit between $4.4 billion to $5.5 billion.

The company announced last month that its business in the greater China area had dropped by about 85 per cent year over year since the Lunar New Year period.  

The company, however, said its online traffic has increased, up double digits compared to the previous corresponding period.

Under Armour had previously announced it was expecting the coronavirus outbreak to lower sales by around $50 million to $60 million during the fiscal first quarter.

Fashion brand Abercrombie & Fitch said it expected to take as big a hit as $50 million in lost sales during its fiscal first quarter. 

And Gap said it was expecting to take a sales hit of about $100 million during the first quarter in Asia and Europe.

The retailer recently posted a 1 per cent drop in same-store sales and a 1 per cent drop in online sales. The company posted a revenue of $4.67 billion.

The coronavirus or COVID-19 was first discovered in China in 2019 and has rapidly spread throughout the globe. Fear of getting infected has caused people to avoid crowded places and stores, affecting businesses.

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