Discount retailer, The Reject Shop, posted a decline in profits for the half year attributed to a challenging trading environment and the continued improvements made on the business.

The retailer’s net profit after tax fell to $17.5 million, a 4.4 per cent decline from the previous corresponding period. Earnings before interest, taxes, depreciation and amortisation fell 2.7 per cent to $35.1 million compared to the prior corresponding period.

First half sales rose 2.0 per cent from the previous corresponding period to $432.9 million. Comparable store sales slipped 0.5 per cent.

Bill Stevens, chairman of The Reject Shop Limited, said the results reflect the continued progress the company has made during the period in business improvements. He added the company has also faced challenging trading environment which they had flagged at the annual general meeting in October last year.

Sales for the half year were underpinned by the impact of eight new stores which opened in the first half of 2017, and the flow-on effect of the eight stores (net) opened in FY2016.

“While we continue to make headway in positioning the business for the long term, the progress we have made in this period has not been enough to fully counter the extremely challenging trading conditions experienced in the first half, particularly in the Western Australian market,” said Ross Sudano, managing director.

“Our strategy is underpinned by a focus on understanding our customers, creating a distinctive offer in the market and continually reducing our costs to enable us to reinvest in driving top line sales growth,” he said.

Sundano said their efforts to continue to improve the instore experience are advancing to the next phase with the rollout of an upgraded in-store communication system that communicates their customer promise and brand personality.

“We expect to complete over 100 store upgrades during H2 2017.”

Sudano said the challenging market environment experienced in the first half of the financial year, particularly the second quarter, have continued in the first six weeks of trade in the second half.

“We remain focused on our customers and on improving our business to enable us to continually invest in additional value to our customers,” he said.

“While we acknowledge we did not execute up to expectations during the first half, we have confidence in our long term plan.”