Reject Shop says “extremely challenging” retail conditions won’t stop it meeting profit guidance

It seems like  the management teams at retailers worldwide are competing to find the worst ways to describe existing high-street retail conditions.

Today management at The Reject Shop Ltd (ASX: TRS) described retail conditions in Australia as “extremely challenging”, but claimed it should still meet prior guidance for a net profit of around $10.5 million for the six-month period ending December 31 2018.

Elsewhere in the UK management at high-street sports apparel store Sports Direct described retail conditions in the UK near Christmas as “unbelievably bad”, with many analysts in Australia warning that it too faces poor conditions on the back of falling house prices and feeble wage growth.

Recently, adventure retailer Kathmandu Holdings Ltd (ASX: KMD) downgraded its profit guidance after what it flagged as a weaker-than-expected Christmas period, with high-street retail shares down across the board.

The Reject Shop is especially keen to remind shareholders of its respectable performance as it has been the subject of an unwanted takeover bid by Allensford Unit Trust that The Reject Shop’s management feels undervalues the business.

Motley Fool contributor Tom Richardson has no position in any of the stocks mentioned. The Motley Fool Australia has recommended The Reject Shop Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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