The Warehouse Group to repay $68 million in wage subsidy
Monday, 21 December 2020
The Warehouse Group says it will repay the almost $70 million it received from the Government’s wage subsidy earlier this year.
Sales in the first quarter of the new financial year for the group increased by 6.3 per cent and now stand up 6.6 per cent year to date compared to the same period last year.
The group includes The Warehouse, Noel Leeming, 1-day and Torpedo7.
Profit for the half year is expected to exceed $70 million, before the repayment of wage subsidy, compared to $46.2m in the previous financial year.
**READ MORE:
* Wage subsidy was never meant to line rich pockets
**
The group received $67.7m from the scheme for 11,000 staff but attracted criticism when it went on to restructure its operations and cut hundreds of jobs.
Prime Minister Jacinda Ardern said she was “angry” at the retailer’s proposal to cut jobs.
University of Auckland accounting professor Jilnaught Wong earlier pointed to the retailer as an example of one that should pay the subsidy back.
“They went through some difficult months but the point is that their online sales have increased and overall they have got twice the amount of cash sitting around as they did in the same time last year,” Wong told Stuff.
Chief executive Nick Grayston said: “Sales performance to date has been well above expectation, and our financial position has remained strong. We are now in the position where the wage subsidy can be repaid in full.
“We are grateful to have received the Government wage subsidy which allowed us to commit to paying our 11,000 team members quickly, and in full, during a time of great uncertainty.
“The strong sales performance is due to a trading environment which is more buoyant than expected and is also a reflection of our strong omnichannel readiness. We could not have achieved this position without the improvements our teams have made in our stores, our digital platform, distribution and fulfilment centres, and our support offices. This outcome is particularly notable given the negative impact of shipping availability issues outside of our control.”
He said stock levels were “satisfactory” for the summer and back-to-school period but, because of shipping delays and increased demand, there could be delays for delivery of winter products.
He said the group expected the half-year’s net cash balance to be better than the FY20 year-end position of $168m.