money & Banking

Courtney Allan

The Reject Shop in crisis – stores set to close in weeks

The Reject Shop in crisis – stores set to close in weeks

With The Reject Shop predicting a loss of $2 million this financial year, the company is set to close the doors of seven of its Australian retail outlets within the next month.

This follows the shock announcement of the CEO quitting.

There have been rumours circulating since late last year that the discount chain store was struggling, but the news of the stores closing comes as a surprise.

Some of the reasons that were given for the outlets closing are falling profits as well as increases to operational costs.

With the iconic retailer starting out as a single shop in Melbourne back in 1980, it quickly expanded to 350 franchises across the country in 2017.

In an attempt to revive its loss in sales, the company made in-roads into the designer homewares market that has usually been dominated by Kmart and Target.

Australian fashion designer Peter Morrissey had teamed up with The Reject Shop to create a collection of affordable and on-trend homeware items to meet customer demands.

The ‘Home Collection’ included $25 quilt covers, $15 throws, $12 bath towels and $5 hand towels.

“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.”

It is not yet known which stores will be closing their doors.