The Reject Shop expects its full-year profit to drop by almost a third and to scrap its final dividend after third-quarter comparable sales declined in every state and territory.

The retailer says underlying comparable sales so far in the second half are down four per cent on the prior corresponding period, and it now expects a full-year profit of about $12.5 million – compared to $17.1 million in 2015/16.

“The extremely challenging external environment, as well as execution issues with our merchandising strategy, have combined to deliver a weak sales trend, outweighing the positive sales momentum achieved during December,” managing director Ross Sudano said in a statement on Friday.

The company announced given the fall in projected earnings per share, and working capital requirements, the company is unlikely to declare a final dividend.

“Recent sales results as well as feedback from customers tell us that, in attempts to broaden our focus on introducing new and fresh products, our merchandise mix has moved too heavily towards a focus on variety products,” Sudano said.

Sudano said the reduced focus on their everyday value and bargains, and its impact on their instore promotional program, have adversely affected their foot traffic.

“Coupled with the challenging market environment, where customers are reducing their discretionary spend, our promotional activity has not generated the incremental foot traffic required to grow comparable sales.”

“We have a strategy to address this by altering our product mix, actively rebalancing marketing activity and instore activity to emphasise a stronger blend of everyday value,” he said.

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