Billionaire Solomon Lew’s retailing group Premier Investments will not hand back the nearly $20 million it received in JobKeeper payments during the first half of its 2020-21 financial year despite nearly doubling its profits and paying a dividend.
Premier, which owns brands such as Peter Alexander, Smiggle and Just Jeans, told investors on Wednesday net profit surged 88.9% to $188.2 million in the six months to the end of January, helped by a 7.2% rise in sales during the period.
That solid sales growth was driven by a surge in online sales by the retailer.
Online sales soared during the pandemic, jumping 61.3% to $156.7 million or 20% of total sales.
The result was slightly stronger than the one indicated in a trading update on January 13.
The retailer will pay a steady 34 cent interim dividend for its investors, of which around $21 million will go to Mr Lew, the company’s chairman and major shareholder.
The earnings boost was helped by a total of $19.7 million in JobKeeper and other wage subsidy payments the company received over the half, which it defended taking in light of the Victorian coronavirus lockdowns.
“At the start of the first half, the Victorian government mandated the closure of 216 of the group’s stores for most of August, September and October.
As a result of this government mandate, the group suddenly lost $44 million in-store sales and corresponding gross profit of $28.5 million on the same period last year,” the company said.
“The loss of gross profit more than offset the eligible wage subsidy support recognised during the half.”
Premier and Mr Lew have resisted intense pressure from politicians and some investors to return the JobKeeper payments as the retailer was one of the largest recipients of the scheme at around $70 million all up.
Premier said it had continued to pay more than 1,500 of its team members without JobKeeper through government-mandated lockdowns, and said it would commit to using the $15.6 million “net benefit” it received in JobKeeper to continue to pay staff in the event of any future lockdowns.
Premier also pledged its JobKeeper funds would not be used in determining and funding management bonuses or dividends.
The interim dividend declared for the half was in line with the first half of the 2020 financial year, before the coronavirus pandemic took hold.
Kathmandu on Tuesday said it would not be returning the job support payments it received in Australia and NZ in its half year either.
But in media interviews after the release of the results, Mr Lew hinted at a possible return after the pandemic, whenever that is.
Fairfax Media reported Mr Lew as saying that in lieu of paying back the subsidy, Premier would “quarantine” the funds to be used in the event of another snap lockdown, and that the company would look at potentially repaying it in the future.
“We will make that decision when the pandemic is over. We don’t know when that will be,” he said, according to Fairfax.
Doesn’t really sound like the money will be returned any time soon, if at all.
Investors didn’t care, they pushed Premier shares up 2.6% to $23.84.
