Discount retailer The Reject Shop is blaming unseasonably warm weather and the federal budget for its full year profit downgrade.
The company had expected to earn between $17 million and $18 million this financial year, but has slashed the bar to between $14.5 million and $15.5 million.
Warmer autumnal temperatures across the country hurt winter product sales during May, The Reject Shop's chief financial officer Darren Briggs says.
"The dollars missed in May have certainly made a big impact," he said.
The retailer also blamed a general drop-off in consumer confidence, which has been linked to spending cuts announced in the May 13 federal budget.
The news has pushed the retailer's shares down $1.03, or 11.3 per cent, to $8.115 by 1148 AEST.
Mr Briggs said other discount variety stores were struggling too.
"We are hearing across the board that it's very tough out there and it got even tougher in the month of May with winter sales adversely affected," he said.
"There's not a great deal of positivity out there in retail in general and there's not too many of our competitors who seem to be kicking goals either."
More Reject Shop stores may have to close if they can't renegotiate cheaper rents, he added.
"If we can get them down to a level that makes those stores viable going forward then we'll maintain them but if we can't get those rents down there's a possibility of one or two more closures."
Mr Briggs said a new chief executive officer was expected to be appointed soon as long serving boss Chris Bryce prepares to leave at the end of June.
He said the company's current structure was under review and the new CEO would focus on "wage efficiencies" and cutting costs.
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