The Reject Shop (TRS) H2 2024 earnings summary

Executive summary

• FY 2024 sales reached AUD 852.7 million, up 4.1% year-over-year, with comparable store sales up 2.6%.

• Gross profit (pre-AASB 16) was AUD 339 million, up 5% year-over-year, with a margin of 39.8%.

• Statutory NPAT was AUD 4.7 million, down 36% from the prior period, reflecting the absence of prior year one-off insurance income and margin pressures.

• Strong balance sheet with AUD 50 million in cash, no drawn debt, and 385 stores nationwide at year-end.

• Fully franked interim dividend of AUD 0.10 per share paid; no final dividend declared.

Financial highlights

• Gross profit margin (pre-AASB 16) improved by 35 basis points year-over-year to 39.8%.

• Cost of doing business margin increased to 37.7% of sales, up from 36.8% last year.

• Store labor costs rose to 14.6% of sales, up from 13.6% last year.

• Inventory closed at AUD 146.4 million, up from AUD 135.6 million, mainly due to higher consumables inventory.

• Operating cash flow was AUD 3.2 million, with free cash flow of -AUD 12.5 million due to higher capex and shareholder returns.

Outlook and guidance

• FY 2025 focus on improving gross profit margin, managing costs in a high inflation environment, and expanding the store network.

• Expecting to open 15-20 new stores and close about five in FY 2025.

• Gross profit margin expected in the 40%-41% range, with consumables exceeding 50% of product mix.

• Early FY 2025 sales up 1.5% year-over-year, with comp store sales up 0.3%.