Reject Shop
Camera IconReject Shop Credit: Supplied/Supplied

Why Reject Shop may shut more stores

AAPEastern Reporter

THE Reject Shop says it may shutter more of its stores as the company promises a “more aggressive approach” with landlords intent on raising rental prices.

“It is not sustainable that rental increases are running at between two and three times the CPI index in an environment of low wage growth and record low interest rates,” chairman Steven Fisher was due to tell shareholders at the struggling retailer’s annual general meeting on Wednesday.

“The company will have no hesitation in exiting leases where the occupancy costs do not meet our rent to sales criteria. This approach may see further store closures and in some cases relocation to more affordable opportunities”.

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Mr Fisher said comparable store sales rose 0.3 per cent during the first 15 weeks of the new financial year in a welcome turnaround from the 2.5 per cent fall at its outlets in the second half of FY2019.

The Reject Shop closed down seven of its stores and posted a full-year net loss of $16.9 million in August following a $16.6 million profit in the prior year.

Acting chief executive Dani Aquilina said on Wednesday that the improvement in the most recent figures – the company’s best first quarter sales numbers in three years – was likely a result of the retailer’s “core customers” buying more items.

“The next step is to communicate more efficiently and effectively to broaden our customer reach so they understand how The Reject Shop can help them stretch their dollar further,” Ms Aquilina said.

She said the stores also planned to entice more shoppers by providing “substantial discounts on well-known and established brands”.

The company’s shares were down 3.2 per cent to $2.12 at 1315 AEDT on Wednesday.