Bargain retailer The Reject Shop has enjoyed a 3.5 per cent jump in sales, but lower margins and higher supply chain costs has kept profits flat.

Sales for the first half of FY23 were $439.7 million, up 3.5 per cent on the prior corresponding period, with comparable store sales up 2.4 per cent.

Gross profit was flat at $178.7 million, which the company puts down to a shift in sales mix towards low-priced consumables and higher domestic supply chain costs.

The company continued to incur elevated international shipping costs throughout the September quarter, which have since reduced by approximately 80 per cent.

Comparable store sales growth during the first seven weeks of 2023 is up 9.4 per cent, although this period cycles restrictions brought by the Omicron variant of COVID-19.

“Our priorities for FY23 remain unchanged,” said Acting Chief Executive Officer, Clinton Cahn.

“We are focused on improving our merchandise offering, expanding our national store network, managing gross profit margin and the cost of doing business as well as investing in strategic projects across the business, particularly in supply chain and technology, which minimise risk and enable efficiencies and growth.

“While management is focused on the challenges of operating in a rising cost environment, we also recognise the significant opportunity for The Reject Shop to play an important role in helping our customers save money during a time when so many Australians are facing significant cost of living pressures.

“As Australia’s largest discount variety retailer, I believe The Reject Shop can have a meaningful impact during this difficult economic time by offering our customers low prices on both branded consumables as well as exciting general merchandise at great value.”