The Reject Shop’s net profit plunges amid rising costs, shrinkage

The Reject Shop’s net profit declined significantly despite higher sales in the last fiscal year.

The discount retailer’s net profit plunged 35.9 per cent to $4.7 million while sales grew 4.1 per cent to $852.7 million.

“Like many Australian retailers, The Reject Shop continues to face near-term margin pressure from rising costs and higher shrinkage, which adversely impacted profitability in FY24,” said Steven Fisher, The Reject Shop chair.

“In order to address these challenges, management has been focused on gross profit margin improvement. Pleasingly, gross profit margin improved in the second half of FY24 and has continued to improve into FY25.”

During the year, the company made changes to its merchandise strategy. These include launching its homewares range, expanding its seasonal events, improving product presentation, and improving the breadth and availability of its branded low-priced household essentials.

The Reject Shop noted that it was the first full year the new merchandise strategy “was meaningfully in place,” which resulted in comparable store sales growth driven by higher customer transactions and units per basket.

The company ended the year with 385 stores, after closing 12 stores and opening 17. It plans to open about 15 to 20 new stores during this fiscal year, including 10 in the first half.

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