The Reject Shop has reported a “disappointing” result as full year profit fell 31 per cent after the discount chain was caught in the fallout of the summer’s natural disasters.
Company chairman Bill Stevens said it had been a challenging year given the current economic environment and volatility within the retail sector.
“The company’s trading result this year has been disappointing,” Mr Stevens said in a statement.
Net profit fell to $16.17 million for the 12 months to June 30 from $23.4 million a year earlier, Melbourne-based The Reject Shop said on Wednesday.
The company’s major distribution centre in Ipswich, Queensland, was inundated in the summer floods, resulting in a significant loss of inventory which in turn hit sales revenue.
“We’ve had more challenges this year than any other retailer,” managing director Chris Bryce told reporters.
Mr Bryce said the company’s results were not reflective of what could have been achieved.
Shares in The Reject Shop closed down six cents at $10.05.
The stock fell to a 2 1/2-year low last week as share markets around the world plunged.
Despite reporting positive first half sales growth of 1.2 per cent, Mr Bryce said the floods dragged store sales down 4.9 per cent in the second half of financial 2011.
He said the retail value of inventory written off from the Ipswich distribution centre after the flood was almost $10 million and resulted in stock shortages amongst the company’s other stores.
However, despite a tough year, The Reject Shop launched 23 new stores across the country in Western Australia, Queensland, NSW, Victoria and Tasmania, bringing the total number of stores to 217, and said most were performing ahead of expectations.
Sales revenue rose 7.3 per cent to $505.06 million.
Mr Bryce said the Ipswich distribution centre is expected to be up and running by the end of August and the company will rebalance overall stock between its Melbourne and Ipswich stores.
He said the company was prepared for challenging retail conditions to continue in 2012
“Trading conditions remain challenging and market volatility has made an impact,” Mr Bryce said.
Mr Bryce said the challenges The Reject Shop faced gave the company the chance to focus on the opportunities available to improve the existing business.
“The fact we are already able to look forward demonstrates what a robust business we have,” he said.
