Suddenly the weakness apparent in the month to month retail sales figures has emerged in the figures of a leading retailer with The Reject Shop (TRS) yesterday warning of soft sales growth that could lead to a softer half year performance for the discount retailer.
The warning saw shares in The Reject Shop drop 65 cents, or 6.9%, to $8.80.
"We continue to experience patchy consumer sentiment impacted by minimal real disposable income growth, continuing underemployment and declining or stagnant housing price growth. These conditions have resulted in the continuation of the trend of negative comparable sales experienced in WA," chief executive Ross Sudano told the group’s annual general meeting.
“Despite these challenging retail conditions and the fact that we are cycling strong 1Q growth last year, our customer focus and activities to reposition our business continue to build resilience to deal with challenging situations,” he said.
Comparable store sales rose by just 0.3% in the first quarter of the year, and that weak momentum will make it challenging for the company to achieve the previous year’s half year result, he said.
That compares to a strong 6.1% rise in comparable sales for the first quarter of 2015-16. In other words, the slow down in sales in recent months has been noticeable. The Reject Shop made a profit of $18.3 million in first half of 2015-16, with comparable store sales growth of 4.4%.
Sales for the year to June were $799.9 million (an increase of 5.7%) up 5.7% overall and “underpinned by solid comparable store sales growth of 3.0% for the year and the impact of 8 net new store openings during the year, The chairman, Bill Stevens said in the results statement in August.
“This is a pleasing improvement on the -0.8% comparable sales performance for the previous year.” Net Profit After Tax (NPAT) was $17.1 million up 20.1% increase on the prior year, inclusive of a 53rd Trading Week and one-off costs associated with exiting the Melbourne Distribution Centre at Tullamarine.
Excluding the 53rd Trading Week and the Melbourne DC Exit Costs, the Company saw a 47.5% increase in after tax profit to $21.0 million.
