By Sean Cao October 16, 2024
Discount variety retailer The Reject Shop plans to open more stores this year to support sales growth and increase profitability.
In a trading update, the company said it is targeting to open 15-20 new stores in FY25. The chain currently has 386 stores nationwide, having opened 67 new stores and closed 35 underperforming ones since June 2020.
According to chairman Steven Fisher, the discount variety sector presents a significant opportunity for growth over the medium to long term.
Fisher added that the company’s balance sheet remains strong, with $49.9 million in cash and no drawn debt as of June 30.
The store openings are part of the strategies to improve sales and gross profit margin in FY25, said CEO Clinton Cahn.
The company is investing in other initiatives across the business, including in supply chain, technology, infrastructure and warehouse management, he added.
The Reject Shop posted record sales of $852.7 million last year, up 4.1 per cent on the prior corresponding period. However, its profit plunged 35.9 per cent to $4.7 million due to rising costs and higher shrinkage.
During the first 15 weeks of FY25, total sales growth, comparable store sales growth and gross profit margin are all up against the prior-year period.
The company has opened two new stores and closed one during this period and expects to open a further seven in the first half.