The Reject Shop has warned soft sales growth could lead to a weaker half year performance for the discount retailer.
Chief executive Ross Sudano said a combination of patchy consumer sentiment and poor execution of stock flow have hurt the retailer's sales.
"We continue to experience patchy consumer sentiment impacted by minimal real disposable income growth, continuing underemployment and declining or stagnant housing price growth," he told the group's annual general meeting on Wednesday.
The crucial comparable sales figure, which strip out one-off events like store closures or openings, was 0.3 per cent during the first three months of 2016/17, compared to 6.1 per cent in the previous year's first quarter.
"Given this current trading momentum, we face a challenge in respect to achieving last year's half year result," Mr Sudano said.
He said the group did not forecast the demand for products as well as it could have and the varying availability of items in a number of categories have disappointed customers.
"The growth in promotional sales has also introduced a number of challenges around the flow of stock to stores," he said.
"At times we have struggled to support both promotional and regular department sales during the first quarter."
He said the group was working on improving its stock flow.
The group has opened seven new stores and relocated one existing store in the first 13 weeks of 2016/17, taking its network to a total of 348 stores.
The Reject Shop made a profit of $18.3 million in first half of 2015/16, with comparable store sales growth of 4.4 per cent.
Shares in The Reject Shop dropped 65 cents, or 6.9 per cent, to $8.80.
