Reject Shop Profit Plummets 40%
Embattled discount retailer, The Reject Shop, has post a notable 40.6% drop in half-year net profit to $10.6 million – slashing its dividend by over 50% to 10 cents per share.
Shares plummeted shortly after market open, following a warning that discount market will remain “very tough” in the second half of 2019.
Disclosed to the ASX today, The Reject Shop has advised shareholders it expects to deliver a second half 2019 loss of between $6.5 million to $7.5 million.
For the recent half year, sales slipped 1.1% to $432.7 million.
It comes as the retailer continues to recommend against an “opportunistic” $78 million takeover bid received late last year.Concerning full-year outlook, The Reject Shop expects comparable sales to slip 2% – 3%, notching a net profit within $3.1 million – $4.1 million.
The first seven weeks of 2019 has also seen like-for-like sales growth dip by 2.8%.
Despite this, management has also continued to urge shareholders to reject a takeover bid from billionaire investor Raphael Geminder.
Leadership assert they’re developing several new initiatives and product categories to rebound sales and profit – e.g. increased focus on storage solutions, plus improving cost of doing business.
The news follows a string of downgrades from several Australian companies, citing sluggish consumer spending and tough retail conditions.
Discount retail competition has also intensified from the likes of Kmart and Big W, coupled with e-commerce competition.