The Reject Shop's shares have plummeted after it warned its full-year profit will drop by almost a third because of a sales slump.
The discount variety retailer says the weak trading conditions flagged at its half year results in February have continued across its stores in all states, in particular Western Australia and the Australian Capital Territory.
The Reject Shop now expects a full-year profit of about $12.5 million, compared to $17.1 million in 2015/16 and a net operating loss of at least $5 million for the second half.
As a result, the company says it may not be able to declare a final dividend in 2016/17, compared to a dividend of 19 cents a share last year.
The news unnerved investors who hammered the stock down by $2.81 - a 35.5 per cent plunge - to $5.11 on Friday.
The Reject Shop's managing director Ross Sudano blamed a tough retail environment and "execution issues" with the group's merchandising strategy for the weak sales performance.
He said the company's merchandise mix had moved too heavily towards a focus on variety products.
"This reduced focus on our everyday value and bargains, and its impact on our in-store promotional program, has adversely affected our foot traffic," he said.
"Coupled with the challenging market environment, where customers are reducing their discretionary spend, our promotional activity has not generated the incremental foot traffic required to grow comparable sales."
Underlying comparable sales, which strip out one-off events including store closures and openings, fell four per cent in the half year to date.
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