The Reject Shop’s sales have improved in recent months after a sharp drop in winter sales led to a 24 per cent fall in its first half year profit.
The discount retailer made a $12.8 million net profit in the six months to December 31, compared to $16.9 million in the same period a year ago.
The result was at the lower end of the company’s profit warning in January of $12.7 million to $13 million.
Revenue was up 4.4 per cent to $402.2 million, driven by 19 new stores opening in the first half, but comparable sales, which excludes new store openings, were down 3.3 per cent for the half.
Ross Sudano, MD of The Reject Shop, said Christmas sales were strong and comparable sales in the last three months of the first half began to pick up with the trend continuing into the second half.
“The sales improvement in the second quarter has continued into the first seven weeks of the June half, with comparable sales to date slightly positive, albeit still inconsistent when viewed on a week to week basis,” Sudano said.
The Reject Shop noted comparable store sales were particularly disappointing during the months of July and August, attributing weak trading to a combination of poor consumer commitment, sluggish sales of winter product lines due to unseasonably warm weather, and final liquidation sales activity by the Retail Adventures and Discount Superstores chains.
“We still have much work to do and we understand that the changes we are making and plan to make to the business will take time to implement, the earlier response from our customers has been positive. All further changes in the business will be underpinned by a focus on people and capability,” Sudano said.
AAP
