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‘At Home’ Purchases Drive The Reject Shop Sales Up 7.1%

The Reject Shop

The Reject Shop recorded sales growth of 7.1% in the second half of FY 20, driven by strong customer demand for ‘essential’ products during the COVID-19 pandemic, including grocery, cleaning, toiletries and pet care.

The retailer also witnessed growth in its ‘stay-at-home’ categories, including electronics, craft and stationary, toys, garden, hardware and kitchen items.

Alongside this uptick, there was also a decline in some of The Reject Shop’s traditionally strong performing categories that were impacted by COVID-19 restrictions, including Easter-related products, luggage, party/events, cards, and wrapping paper.

Nevertheless, all states showed positive sales growth in FY20. Over the total financial year, The Reject Shop’s sales increased by 3.5%.

However, in the first seven weeks of FY21 The Reject Shop’s sales were down 2.4%, or down 0.5% excluding Victoria.

“Sales during this period have been adversely impacted by Stage 3 and 4 restrictions in Victoria, particularly at stores in large shopping centres,” The Reject Shop stated.

“Consistent with the ‘fix’ phase of our strategy, management will be primarily focused on achieving EBIT growth during FY 21 through continued cost reduction driven by business simplification and operational efficiency.”

In FY20, the retailer’s gross margin fell as its product mix shift towards, lower margin, higher volume consumables and away from high margin general merchandise in H2 FY20.

Store expenses, which included $400,000 in redundancy costs, fell by in FY20. The Reject Shop did not receive any JobKeeper wage subsidies.

The Reject Shop’s share price has risen since the start of the COVID-19 pandemic, from $2.53 in March to close at $7.77 yesterday.

The Reject Shop ASX 19.08.2020

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