The Reject Shop’s half year profit has fallen 25 per cent as improved sales in the Christmas period failed to offset weak trading in July and August.

The discount retailer’s sales in the six months to December were down 3.3 per cent from the same period a year earlier, excluding the impact of new stores and store closures.

Sales in the December quarter were down 1.7 per cent from a year earlier, and dropped 5.4 per cent during the September quarter.

“While the overall first half profit result is disappointing, reflecting the challenging trading conditions in the first quarter, it is pleasing to report that the trading performance improved in the second quarter and there are signs of continuing improvement in the early weeks of January,” MD, Ross Sudano said.

The Reject Shop expects to post a net profit of between $12.7 million and $13 million for the six months to December 31, down from $16.9 million in the first half of 2013/14.

Its shares were down six cents, or one per cent, at $5.95 at 1210 AEDT.

The Reject Shop is the third major retailer to issue a profit warning ahead of the half year earnings season in February.

Luxury fashion and accessories retailer Oroton expects its underlying earnings to fall by up to $3.5 million due partly to less discounting and costs from its new ventures with US clothing labels Brooks Brothers and Gap.

Losses at the fashion retailer Rivers are also set to weigh in earnings at Specialty Fashion Group, which also owns the Katies and Millers chains.

The Reject Shop will report its finalised half year results on February

AAP