Discount retailer The Reject Shop has posted a full year net profit after tax of $17.1 million, a 20.1 per cent increase from the previous year.
Sales for the financial year were $799.9 million, a 5.7 per cent increase from the previous corresponding year, underpinned by solid comparable store sales growth of 3.0 per cent for the year and the impact of eight net new store openings during the period.
“This is a pleasing improvement on the -0.8 per cent comparable sales performance for the previous year and evidences the success of the company’s back to basics focus through better understanding customers and being able to craft a unique offer in the market place,” said Bill Stevens, Reject Shop chair.
The retailer opened 14 new stores during the period, closing six and ended the year with 341 stores operating Australia-wide.
The company generated earnings before interest, tax, depreciation and amortisation of $44.3 million, an 8.5 per cent increase from the previous corresponding period. Earnings before interest and tax were $24.8 million, an increase of 14.4 per cent.
“The robust financial performance demonstrates the positive impacts of the company’s efforts to improve customer engagement implement a more nimble
supply chain and reduce the overall cost of doing business,” Stevens said.
Stevens said the company expects debt levels to increase slightly during FY17 as a result of an increased capital expenditure program and payment of redundancies and other employee provisions relating to the exit of the Melbourne Distribution Centre at Tullamarine.
Reject Shop has lifted its final dividend 5.5 cents to 19 cents.
“During the year we made significant progress on delivering on our strategy which is underpinned by a focus on understanding our customers and creating a distinctive offer in the market place, and continually reducing our costs to enable us to reinvest in driving top line sales growth,” said Ross Sudano, company managing director.
“In response to feedback from our customers we have increased the number of core products available every day while continuing a focus on improving in-store
promotional activity to increase the frequency of new products arriving to delight our customers.”
Sudano said that while they are pleased with the initial results of their plan to restore the performance of the business, they have much to do over the next three years.
“Sales momentum in Q1 FY2017 has continued in line with Q4 FY2016, with the positive comparable store sales trends across the Eastern Seaboard and
Tasmania being moderated by the relative underperformance across the lesser company populated Store Networks in Western and South Australia.
“We expect to see an improvement in the 2017 financial year profit compared to underlying 2016 earnings,” he said.
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