The Reject Shop's embrace of familiar brands and items like laundry powder and tissues has attracted shoppers back to the discount store, helping lift its first-half profit.
The retailer made a net profit of $17.7 million in the six months to December 31, up 1.1 per cent on a year earlier and above its previous guidance.
Chairman Bill Stevens says a greater focus on everyday items has brought in more customers, especially over the Christmas period, and helped revenue rise one per cent.
However, the boost in customer numbers was offset by shoppers on average taking fewer items to the checkout, Mr Stevens said.
Comparable store sales rose 0.4 per cent despite weaker economic conditions and tougher competition at its West Australian businesses.
Overall sales were boosted by six new stores opening during the period, six opening the previous year and three relocating within the half.
Turnover of branded products had also improved, managing director Ross Sudano said.
"The availability of key selling lines are at the highest levels we have seen in our business for some time," he said.
Gross margins also improved due to fewer in-store markdowns and promotions, due to a more balanced range of products and the well-managed movement of stock.
Mr Sudano said sales were up 1.3 per cent so far in the second half of the financial year, despite the New Year's Day holiday falling within the second half rather than within the first half as it did last year.
"The company is confident that recent positive comparable sales trends in the range of one per cent to two per cent can continue throughout the remainder of the half," he said.
With subdued but positive comparable sales heading into the second half, The Reject Shop expects a full-year net profit of between $16.5 million and $17.5 million, higher than the prior year's $12.3 million but indicating the business will suffer a net loss for the second half of the year.
Reject Shop shares gained 77 cents, or 13 per cent, to a 10-month high of $6.67.
REJECT SHOP LIFTS SALES AND PROFIT
* First-half net profit up 1.1pct to $17.7m
* Revenue up 1.1pct to $437.6m
* Interim dividend unchanged at 24 cents, fully franked.
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