Super Retail Group has become the third major retailer to announce staff underpayments this week, revealing on Thursday it has underpaid store managers and team members by $12.6 million more than it originally estimated.
But the company has kept faith with shareholders by maintaining a steady dividend despite a weak profit performance and the underpayment scandal.
The company – which owns Rebel Sport, Supercheap Auto, Macpac and BCF – is in fact a second-time offender, like Woolworths. Super Retail announced early in 2019 that it had underpaid some of its store managers by $32 million.
On Thursday it updated those estimates, telling investors alongside its half-year results that it had identified $8 million additional expenses relating to its underpayment remediation.
While the total number of affected workers was lower than estimated last year, Super Retail said as part of its investigation it had found “additional team members also impacted by overtime underpayments”.
The latest revelation bumps the total cost for Super Retail’s staff underpayments to $61.2 million, adding to the millions of dollars it had underpaid team members last year, which saw the early retirement of long time CEO, Peter Birtles.
Super Retail’s admission makes it the third major Australian retailer to announce major underpayments this week, with Coles and Wesfarmers-owned Target also embroiled in wage scandals.
It follows supermarket giant Woolworths’ huge $300 million staff underpayment announced last year. Close to half a billion dollars is now involved in the underpayments by the major retail groups.
The market ignored the news, sending the shares up on the day as investors looked at the accompanying half-year report (which has already been guided to in an update last month).
That’s despite total back pay and additional expenses related to the underpayment cost Super Retail $12.6 million, which helped lower the company’s profit by 19.9% for the half-year.
Normalised net profit after tax dropped 9.6% to $74.1 million, in line with expectations after the company warned investors in January its outdoor divisions Macpac and BCF had been badly affected by the fires.
Revenue for the group rose 2.9% to $1.44 billion, thanks mostly to sales growth in the Rebel and Supercheap Auto chains, which account for over two-thirds of earnings. Like for like sales grew 1.7% across the whole group over the half.
Bushfires and drought hurt the company’s outdoor divisions, with like-for-like sales at BCF falling 0.5%, as 50 of its stores were directly affected by the crisis. Non-bushfire affected stores grew like-for-like sales 3%.
Macpac continued to drag the company’s results, with like-for-like sales down 7%, declining in both New Zealand and Australia.
Despite the weak performance, the company has maintained its interim dividend of 21.5 cents per share, which helps explain why the shares jumped 5.55 to $9.61.
