The share price of Reject Shop Ltd (ASX: TRS) fell 40% in early trade on Wednesday after releasing a pre-AGM trading update.
Reject Shop is a discount retailer that sells a variety of items including food & drink, health & beauty and stationery.
The trading update:
Reject Shop revealed that comparable sales for the first 15 weeks of the 2019 financial year are down 2.4%. Over the latest 8 weeks comparable sales are actually down 3.9% despite a large marketing effort.
The retailer said that current conditions represented an extremely weak retail environment.
Reject Shop has downgraded its profit guidance for the first half of FY19 to between $10 million to $11 million. This compares to a previous prediction of $17.7 million first half profit based on comparable sales growth of just 1%.
Managing Director of Reject Shop Ross Sudano
said: “The continuing absence of real wage growth and increases in the cost of many basic expenses (including mortgage rates) ensures that competition for the discretionary spend of consumers remains high.”
Amazon Australia just launched its pantry food & drink offering, which means there is another competitor for Reject Shop in the non-fresh food category.
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