Reject Shop makes a slow start for new chief Ross Sudano

Weak consumer sentiment and a warm winter have contributed to a slow start to the new financial year for discount retailer The Reject Shop. Weak consumer sentiment and a warm winter have contributed to a slow start to the new financial year for discount retailer The Reject Shop.
Wuxi Plastic Surgery

Weak consumer sentiment and a warm winter have contributed to a slow start to the new financial year for discount retailer The Reject Shop.

Weak consumer sentiment and a warm winter have contributed to a slow start to the new financial year for discount retailer The Reject Shop.

Discount variety chain The Reject Shop has reported a subdued start to the new financial year as same-store sales in the three months ending September fell 5.4 per cent and total sales rose just 2.7 per cent.

The worse-than-expected decline in same-store sales followed a sharp deterioration in trading conditions in the last two weeks of August. Same-store sales in the first six weeks of fiscal 2015 were down slightly, continuing the trend in the second half of 2014, when sales slipped 1.2 per cent.

The drop in sales highlights the challenges ahead for new Reject Shop managing director Ross Sudano, who took the helm late last month after the departure of Chris Bryce this year.

In a trading update before the annual meeting on Wednesday, Mr Sudano, the former chief of boutique brewer Little World Beverages, said comparable store sales had improved considerably” over the last five weeks and were flat for the first two weeks of October.

Mr Sudano said new strategies aimed at addressing the decline in sales were starting to take effect.

He blamed the sharp drop in same-store sales on weak consumer sentiment and the after-effects of an unseasonably warm winter, which depressed demand for seasonal products offerings and forced the company and its rivals to slash prices to clear stock.

Mr Sudano said fire sales during July and August by Reject Shop’s main rival, Discount Superstores – which owns about 200 outlets of Sam’s Warehouse and Crazy Clark’s – added to the pricing pressure. About 70 Sam’s Warehouse and Crazy Clark’s stores were in direct competition to Reject Shop stores.

Trading in Reject Shop stores was also disrupted by the “accelerated re-lay of all stores during a two-month period” starting in mid-July, Mr Sudano said.

Reject Shop reported a 26 per cent fall in net profit to $14.5 million for the 12 months ending June as costs associated with the opening of 46 new stores outweighed a 15 per cent rise in sales to $711.5 million.

The company is hopeful that an aggressive store opening program over the past two years will soon start to bear fruit. Reject has opened about 90 stores, almost half of which were previously owned by Discount Superstores, which collapsed in July for the third time in five years.

Discount Superstores’ owner, former Kathmandu founder Jan Cameron, has agreed to pay almost $14 million to settle an insolvent trading claim and head off potential legal action following the collapse of the group two years ago.

The original release of this article first appeared on the website of Wuxi Plastic Surgery Hospital.