Reject Shop shares are on a tear after sales recover from a grim winter

Getty/Dan Kitwood

Reject Shop sales have started to improve after a slump during winter.

The retailer pushed revenue up 4.4% to $402.2 million in the first half, helped in part by strong Christmas sales.

However, profits fell 24% to $12.8 million.

Chairman Bill Stevens said sales growth was driven by 19 new store openings in the half as well as growth from stores opened in the prior year. Reject Shop has 337 stores nationally.

Sales in July and August were hit by a combination of poor consumer sentiment, sluggish sales of winter product lines due to warmer weather and final liquidation sales activity by competitors.

However, sales in the second quarter stabilised with improved customer traffic and solid Christmas sales.

The directors have declared a fully franked interim dividend of 16.5 cents.

Reject Shop shares are up 20% to $6.52.

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