The Reject Shop is forecasting a return to profit growth next year after its full year profit for FY15 slipped 1.9 per cent, despite an overall sales increase.

Net profit for the 12 months to June 30 fell to $14.2 million, from $14.5 million, although the net addition of 12 new stores lifted total sales 6.4 per cent to $756.8 million.

Comparable sales declined 0.8 per cent for the year. The company had issued a profit warning in January after same store sales for the first six months dropped 3.3 per cent. After a difficult first half, sales improved 2.3 per cent in the second half.

The Reject Shop MD, Ross Sudano, said the building blocks are now in place to deliver long term growth.

“We have made significant changes which are beginning to deliver pleasing results. However we still have much work to do to restore the business to a point where it generates acceptable returns for shareholders,” he said

Throughout the period, 21 stores were opened and nine closed. The company has 335 stores operating across the country.

“We indicated we would take an active approach to managing our store portfolio, particularly where our financial criteria were not met. We took the difficult decision during the year to close nine stores where acceptable terms could not be reached,” Sudano said.

“While we are pleased with the initial results of our plan to restore the performance of the business we have much work to complete over the next three years.

“Our momentum gained during Q3 and Q4 of FY15 has continued into the first quarter of the new financial year with strong growth in comparable store sales continuing during July. We expect an improvement in the 2016 financial year profit compared to 2015,” he said.

The company’s final dividend of 13.5 cents per share, fully franked, is up from 8.5 cents last year.

AAP