AUSTRALIA: The Reject Shop Issues Profit Warning

The Reject Shop discount variety chain has issued a stark profit warning for its current fiscal year, which sent its shares plummeting today.

The chain said it continues to face weak trading conditions, and now expects full-year profit to fall to around A$12.5m for the year, down from A$17.1m in 2015-16. It also warned it may not be in a position to declare a final dividend for the current fiscal.

Ross Sudano, MD of the chain, said that besides the overall market, the chain was also hurt by “execution issues” related to its merchandising strategy.  He said the product mix had shifted too much towards variety products, which “reduced focus on our everyday value and bargains, and its impact on our in-store promotional program, has adversely affected our foot traffic”.

Shares in The Reject Shop were down by around 33% today after the announcement was made.

NAM Implications:
  • Is nothing sacred?