Reject Shop has booked record sales and lifted its dividend

The Reject Shop has built its reputation over 40 years as a store where value is king amid tougher economic times, and the retailer has pulled off record sales, higher profit and hiked up its dividend.

The Reject Shop has booked rising sales, profit and upped its dividend.

Shoppers are warming to The Reject Shop’s refreshed general merchandise offer amid cost-of-living pressures where value is king, generating record December-half sales and allowing it to hike its dividend by 20 per cent.

The Reject Shop, which operates 393 stores and has built a 40-year reputation for offering affordable homeware and merchandise items at times of economic pain, has ended the period in a strong cash position, with cash of $74.9m.

On Thursday The Reject Shop posted record first-half revenue of $471.72m, up 2.9 per cent, as net profit jumped 10.1 per cent to $15.95m. The improving financial condition of the retailer, which in recent years has struggled, saw its shares spike 18 per cent to $3.50.

Reject Shop declared an interim dividend of 12c per share, up from 10c, and payable on May 1. The bumper dividend will mostly be paid out to packaging millionaire Raphael Geminder who is The Reject Shop’s largest shareholder with a stake of just over 20 per cent.

Recently appointed Reject Shop chief executive Clinton Cahn said the retailer was benefiting from its refreshed general merchandise offer as the company focused on its key priorities of improving gross margin, delivering same-store sales growth and continuing to open new stores.

“Our stated priorities for fiscal 2025 are to continue to improve gross profit margin while also growing sales through the ongoing improvement of the merchandise offering and expanding our national store network,” he said.

“I am pleased to announce today that, during the first half, the company generated record first-half sales, general merchandise sales returned to growth, gross profit margin improved by approximately 125 basis points, nine new stores were opened and we reported the highest net profit after tax result since the first half of fiscal 2018.”

Over the December half, same-store sales rose 1.5 per cent, led by an improved second quarter performance driven by a well-executed Christmas trading period that saw strong sales growth and gross profit margin gains, particularly in Christmas categories.

Mr Cahn said the retailer was acutely aware that The Reject Shop played a critical role in supporting Australians facing significant cost-of-living pressures.

“We do this by helping our customers save money,” he said.