What does The Reject Shop’s (ASX:TRS) sales guidance for FY21 reveal?

Summary

  • The Reject Shop (ASX:TRS) said the trading activity was ‘well below’ the pre-pandemic levels.
  • The company expects full-year sales for FY21 to be between AU$776 million and AU$778 million.
  • The company had not previously provided sales or profit guidance for FY21.

The Reject Shop Ltd (ASX:TRS) on Friday said that the coronavirus lockdowns have continued to negatively impact its sales, and the trading activity was ‘well below’ the pre-pandemic levels. The COVID-19 had dented the sales performance during the second-half, with January and February sales adversely impacted by the Brisbane, Perth and Victoria lockdowns and virus-related concerns in New South Wales.

Source: ©Miflippo  | Megapixl.com

The company expects full-year sales for FY21 to be between AU$776 million and AU$778 million and earnings before interest and tax (EBIT) for FY21 to be in the range of AU$8 million and AU$10 million. The company had not previously provided sales or profit guidance for FY21.

READ MORE: April retail sales rise as shoppers brush aside pandemic woes; consumer stocks up

The Reject Shop also said that the preliminary and unaudited comparable sales for the 48 weeks ended 30 May 2021 were down 1.4% against the comparable period in the financial year 2019.

Comparable sales at CBD locations and large shopping centres (47 stores) were down 12%, while the remainder of the portfolio (290 stores) were up 0.9%. Of those 47 CBD and large shopping centre stores, nearly 35 of those leases would expire in the next 18 months or were currently being renegotiated or had recently been renegotiated.

Source: © Herrbullermann  | Megapixl.com

The company also said that it continued to incur materially increased supply chain costs.

READ MORE: Australia’s March quarter GDP rises 1.8%, beats estimate

Appointment of independent non-executive director

The company also announced the appointment of Margaret Zabel as an independent non-executive director to its board effective from 4 June 2021.

Stock performance

On Thursday, 3 June 2021, the shares closed at AU$6.32, down 0.94%, or 0.060 points against the previous closing on Wednesday, 2 June 2021. The Reject Shop competes with Treasury Wine Estates Ltd (ASX:TWE), Metcash Ltd (ASX:MTS, Woolworths Group Ltd (ASX:WOW), and Coles Group Ltd (ASX:COL), among others in the consumer sector.

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