Recently, some retailers have downsized their store footprint but The Reject Shop has been doing the exact opposite and it is starting to pay off.
The retailer, which opened 41 stores in FY13, reported a sales growth of 13.3 per cent to $618 million from $545.3 million. Meanwhile, comparable store sales are up 1.8 per cent for the full year compared to 0.5 per cent in the previous year.
Additionally, the company announced a full year net profit after tax of $19.5 million.
The Reject Shop managing director Chris Bryce said the company’s accelerated store rollout program continues to underpin its long term growth.
“Despite poor consumer sentiment and retail sales trends we continue to trade well and we have now delivered positive comparable store sales growth in every quarter since re-opening the Ipswich Distribution Centre in October 2011,” he said.
“Improving our underlying profit in current conditions is pleasing, as we have maintained price competitiveness and our customer service standards, while supporting our brand positioning and absorbing cost increases.
“Most significantly, we were able to grow our business while embarking on a substantial store expansion program which we believe will lay the foundation for a far more robust and profitable business into the future.”
The company indicated that more than 40 new store openings are planned for the next year. The company has already spent $7 million alone in pre- and post-opening support for its store openings.
“We are in advanced negotiations on a number of additional sites and there is a strong likelihood we will be able to secure additional stores to open in FY2014 beyond those confirmed,” Bryce said.
“We have opened 14 new stores since the start of July (equating to 2 new stores per week) and aim to have more than 30 new stores opened by December 2013.
“The new stores, collectively, have performed strongly. This is extremely satisfying given that the bulk of these stores are being operated by management and staff relatively new to the business. It is a challenging process to support this number of new stores and new people in such a shortened timeframe, while ensuring that the underlying business continues to grow.”
Bryce also commented that the first few weeks of this year have already delivered positive comparable store sales growth in line with last year but the company will continue to remain mindful of any potential impacts.
“We do however remain cautious in our outlook for sales given the current economic and political environment, and believe the potential still exists for volatility in consumer spending,” he said.
“We expect solid underlying profit growth for the current year, underpinned by the extensive store opening program in FY2013 and first half FY2014, although tempered by the costs associated with the FY2014 store openings. We also expect to deliver strong profit growth in FY2015.”