Monday, March 4, 2024

The Reject Shop presents half-year results

The Chairman of The Reject Shop, Steven Fisher, said: “The 1H21 result and the progress made during the ‘fix’ phase is pleasing, particularly given the strategic and operational change that has occurred in the business over the past 12 months within an uncertain operating environment. During the second half, The Reject Shop will continue to navigate the challenges associated with Covid-19 as well as the international supply chain. We are targeting to complete the ‘fix’ phase by the end of FY21.”

“The strength of our balance sheet, together with our experienced management team led by Andre Reich, will hold the Company in good stead as we build on our strategy.”

Sales for 1H21 decreased by $1.4 million or 0.3% on the pcp to $434.3 million. Comparable store sales were flat.

Sales during the half were impacted—in some instances unfavourably and in others favourably—by various State Government restrictions relating to Covid-19. This included Stage 3 and Stage 4 restrictions in Victoria between July and October, the South Australia lockdown during November, restrictions in NSW during December as well as border and travel restrictions across the country, which impacted customer behaviour. Stores in CBD locations and large shopping centres were impacted the most with reduced footfall due to concerns around Covid-19.

Sales during the half were also negatively impacted by stock availability issues, mainly resulting from delays in international shipping, the Company said. “Almost all Christmas stock was on the shelves before Christmas –the range resonated well with customers and effectively sold-out before Christmas Eve. Given the high level of uncertainty around how Covid-19 might impact Christmas 2020, the Company decided to reduce the amount of Christmas stock it bought during the half.”

During the first half, three new stores were opened and one underperforming CBD store was closed. In the first two months of the second half of FY21, two further underperforming stores were closed. The national store footprint remains at 354 stores with a further nine stores expected to open progressively during the fourth quarter of FY21.

During the second half, management will continue to focus on cost reduction, driven by business simplification and operational efficiency, the Company said. “Covid-19 continues to impact sales performance with January and February sales adversely impacted by lockdowns in Brisbane, Perth and Victoria, Covid-19 concerns in NSW, and changing State border restrictions. Stores in CBD locations and large shopping centres continue to be negatively impacted by reduced footfall. In addition, ongoing challenges in the international supply chain are expected to result in increased costs through higher shipping charges and to continue impacting stock availability.”

Chief Executive Officer Andre Reich said: “Our objective in FY21 is to grow profit through cost reduction driven by business simplification and operational efficiency. We are only half-way through the financial year and the progress made to date has been pleasing. I am proud of how much we have achieved and how well our teams have responded to the significant changes that have occurred within our business over the past twelve months.”

“While the profit growth achieved during the first half is pleasing, the operating environment remains uncertain for the second half with ongoing challenges associated with Covid-19 and the international supply chain. During the second half, we will focus on navigating through these challenges, continuing to ‘fix’ the business, and preparing for the ‘reset’ and ‘grow’ phases of the turnaround strategy.”

“We believe the discount variety sector presents a significant opportunity for growth over the medium to long term. As Australia’s largest discount variety retailer, and with our strong balance sheet, The Reject Shop is well positioned to capture this opportunity.”

“There is further work to be done to ‘fix’ The Reject Shop and, once the cost base is optimised, we expect to be well-placed to pursue longer-term growth via store network expansion and by growing our online presence.”

“The Reject Shop has a clear purpose: we are here to help all Australians to save money every day. During the half, we pursued that purpose with real commitment and focus while also fixing the business with a view to serving even more Australians. I would like to acknowledge the hard work and dedication demonstrated by our store teams who continue to provide a safe and clean shopping environment for our customers during the Covid-19 pandemic.”

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