Discount retailer The Reject Shop’s (TRS) weak trading performance for the six months to June especially has seen the company omit its final dividend for the 2016-17 financial year.
And to make matters worse the company has seen no improvement in the early weeks of 2017-18 with sales still slowing – same store sales were down 3% in the first seven weeks of the new financial year against a 2.5% slide in the final six months.
If that doesn’t improve – same store sales in the same period of 2016-17 were down 0.8%, another slide in profit is likely for the current half.
The decision to scrap the final payout was revealed in early April when the shares fell by a quarter in one day after the retailer downgraded its sales performance and its expected 2016-17 profit to around $12.5 million.
The company earned $17.1 million in 2015-16 and an interim after tax profit of $17.5 million (which was down 44% on a year earlier).
That means the company has lost $5.3 million after tax in the second half of the financial year.
In the end the figure was a touch weaker than that further justifying the decision to withhold the final payout.
The company paid an interim of 24 cents a share in March, but the slump in sales performance and earnings has seen the final dropped as the company looks to conserve cash.
TRS paid a final a year ago of 19 cents a share, making 44 cents a share for the full year. This year shareholders will have to settle for the already paid interim.
The Reject Shop said Wednesday that full-year profit has fallen 27.8% to $12.3 million, due to weak trading conditions across its stores, particularly in Western Australia and the Australian Capital Territory.
Same store sales fell 1.6% over the year (the first half saw a dip of 0.8%, but this accelerated to a fall of 2.5% in the second half).
EBITDA fell 13.4% to $38.3 million. The company said its gross profit margin fell 80 points in the year because of the sales slowdown.
Sales revenue for the 52 weeks to July 2 slipped slightly, 0.7 per cent, to $794 million on account of its 2017 financial year being one week shorter than the 53 weeks included in 2016, it says.
