Reject Shop CEO Exits, Full-Year Guidance Slashed
The Reject Shop’s CEO Ross Sudano has resigned following store closure announcements and slashing its full-year guidance to an expected loss of up to $2 million.
The news follows the embattled discount retailer’s plummeting sales and profit margins since the start of the second half.
General manager of the supply chain, strategy and innovation, Dani Aquilina, has been appointed acting CEO in the interim.
Reportedly, the struggling retailer had expected a full-year profit between $3.1 million to $4.1 million, but its efforts fell short and the company is now expecting a loss of $1 million to $2 million.
Comparison sales in the second half were down 2.9% and down 2.7% for the year to date. Gross margins in the second half were also well below expectations.
Its shares have fallen 70 per cent in the last 12 months following the ongoing disappointing results, in early trade its shares are currently down 9% to $2.06.
The loss is being attributed to a “tough trading environment in the retail sector which has continued to be impacted by low consumer confidence, flat wages, increases in the cost of living and a rapidly falling housing sector”.
Seven stores are scheduled to close by the end of June, leaving a remaining network of 357 outlets.
The Reject Shop refused a $78 million takeover bid in November of last year from Allensford Unit Trust, a major shareholder of the company.
At the time, the bid was described as “opportunistic”, “inadequate” and “low-ball” by the board of directors.
A representative of the Allensford group, Zac Midalia, has now joined the company’s board along with Non-Executive Chairman of Breville Group, Steven Fisher as a non-executive director.