The Warehouse Group posts $44.5m profit after $67.7m wage subsidy
Thursday, 8 October 2020
The Warehouse Group has posted a preliminary unaudited profit after tax of $44.5 million for the year to August 2.
The retail giant, which owns The Warehouse, Warehouse Stationery, Noel Leeming, Torpedo7 and TheMarket.co.nz, said it would have made a $4.3m loss without the $67.7m wage subsidy it received from the Government.
In a statement to the NZX, The Warehouse said its net cash position was $168.1m, as a result of “strong working capital management and robust trading conditions following the first seven weeks after the level 4 lockdown”.
The company said it would not pay a dividend despite its net cash position, citing “continued uncertainty” around economic activity and its trading outlook.
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Group sales of $3.2 billion were up 3.3 per cent on the previous financial year.
About $1.5b of sales were generated in the second half of its financial year, with sales up 4.1 per cent in the period, the company said.
Last month, The Warehouse Group confirmed its plans to reshuffle jobs at 62 The Warehouse stores as part of the company’s ongoing restructure plans.
It announced plans to cut 1080 jobs as part of a major restructure across the group in July.
The group withdrew its earnings guidance for this year as a result of the uncertainty around trading performance.
The company indicated to the market that it would announce its full year results on October 15 but it posted the preliminary version a week ahead.
Hamilton Hindin Greene investment adviser Jeremy Sullivan said this was likely due to the company not announcing its guidance this year.
“Under the continuous disclosure rule any movement away from guidance of 10 per cent or more they are required to let the market know and that can be outside of cycle,” Sullivan said.
He said it was sensible for The Warehouse Group to not offer a dividend after other companies were criticised this week for doing that after pocketing the wage subsidy.
“It is not a good look for a company to take the wage subsidy and then pay it to shareholders in a round-about way,” Sullivan said.