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AAP

2013-02-20

Discount retailer The Reject Shop hopes to open a record number of stores in 2013 and expand overseas, possibly into China.

The group outlined its plans on Wednesday as it reported a 21 per cent rise in first half profits.

The Reject Shop opened 17 new stores across five states in the first half of its 2012/13 financial year and aims to eventually reach 400 outlets.

"We expect to open 40 stores in 2013, a company record," managing director Chris Bryce said on Wednesday.

"We're extremely well-placed to support further store growth should opportunities arise."

The company also plans to develop an overseas presence, and may open an office in China to help improve its supply chain.

"While most of our business will stay here, having an overseas presence - mostly in China - will give us a bit more flexibility in where we can source from but also more control over purchases," he said.

The Reject Shop's net profit rose to $20.1 million in the 26 weeks to December 30 from $16.6 million in the previous corresponding period.

Total sales revenue rose 12 per cent to $327.5 million, while comparable sales were up 2.1 per cent.

Mr Bryce said while The Reject Shop expects to build its stores' sales base in the second half, providing definitive profit guidance would be difficult given the retail and economic environment coupled with the expense of opening new outlets over the next six months.

Comparable sales during the first seven weeks of the second half had been positive, and the group expects further sales and profit growth in the second half.

"January's always been a relatively slow month for us, but we've had positive growth in January and into February so far," he said.

"It's still relatively tough out there."

Mr Bryce said the company had suffered some impact from floods in Queensland following ex-tropical cyclone Oswald in January, but not to the same extent it suffered when major floods hit the same state in 2011.

The 2011 floods closed the group's key Ipswich distribution centre for 10 months and prompted the deferral of some major operational developments.

"This year, we had some individual stores closed because they were inaccessible over a few weeks, and getting stock to stores (was disrupted) as train lines and roads were impacted by the flood," Mr Bryce said.

On the economy, Mr Bryce said while future interest rate cuts were not expected to have a a big impact on business, the September federal election might.

"Elections historically generally don't help sales," he said.

The Reject Shop maintained its fully-franked interim dividend at 24 cents a share.

Neda Vanovac