More than $155 million has been wiped from the market value of The Reject Shop after the discount retailer said it had a disappointing Christmas trading period.

The company also expects a drop in full year profit.

It had an unexpectedly poor Christmas trading period, with flat comparable store sales, particularly at those in major shopping centres which continued to drag down good growth generally in other locations.

Sales across the six months to December 31 were disappointing, as heavy discounting and the weaker Australian dollar weighed on profits, The Reject Shop said on Friday.

Shares in the company dropped by $5.40, or 32 per cent, to $11.50, reducing its market value to $331.5 million.

It expects sales in the first half of the 2013/14 financial year to total $385.5 million, which is up 17.7 per cent from the same period in the previous year.

But that is influenced by the opening of 33 new stores in the six months to December, and the company’s gross margin was lower than planned and what was achieved in the previous year.

Managing director Chris Bryce said the overall result was well below expectations.

“This reflects flat overall comparable store sales for the half, resulting from an unexpected poor December trading period, coupled with a disappointing gross margin outcome,” Mr Bryce said.

The company expects its annual net profit will be down from the previous year’s $19.5 million, within the range of $17 million to $18 million.

In the second half of the year, The Reject Shop will target moderate comparable store sales growth, and gross margin percentage in line with the prior corresponding half.

“The reducing Australian dollar will continue to require significant focus and planning over this half and into next year, and we have already addressed some of the areas which resulted in a lower margin result this half,” Mr Bryce said.

The company plans to open 12 new stores in the six months to June 30.