Retailer to reject seven stores

THE Reject Shop’s chief executive has quit after the troubled discount chain announced store closures and warned it was likely to report a full-year loss.

Ross Sudano would leave “in the near term”, the retailer announced yesterday, and seven stores would close by the end of June.

General manager of supply chain, strategy and innovation Dani Aquilina has been appointed acting chief executive while the group searches for a replacement for Mr Sudano.

In February, The Reject Shop said it expected to be loss-making this half, but that it was likely to report a fullyear net profit of $3.1 million to $4.1 million. It now expects a full-year net loss of $1 million to $2 million.

Shares in the group tumbled on the revelations yesterday, closing 7.5 per cent, or 17¢, lower at $2.10 – little higher than the 14-year trough of $2.02 they hit in November.

The Reject Shop said merchandising and operational changes it made in hope of a turnaround had fallen short. QUITTING: CEO Ross Sudano.

“The reduced earnings guidance reflects a tough trading environment in the retail sector, which has continued to be impacted by low consumer confidence, flat wages, increases in the cost of living and a rapidly falling housing sector,” the company said in a statement.

“Gross margins have fallen as the expected benefits from sales and merchandise related initiatives have not landed with consumers during the half.”

Seven stores will close by the end of June after the company was unable to negotiate “acceptable” rents, leaving a network of 357 outlets. It did not say which stores would close.

Breville non-executive chair Steven Fisher and Zac Midalia, representing the Allensford group that this year tried to buy The Reject Shop, have joined the retailer’s board.