Warehouse Group records profit, but only due to wage subsidy

The Warehouse Group has posted a profit of $ 44.5 million in fiscal 2020.

The company, which operates The Warehouse, Warehouse Stationery, Noel Leeming, Torpedo7 and TheMarket.co.nz would have had a loss without the $ 67.7 million it received in wage subsidies.

It will not pay dividends despite having a net cash position of $ 168.1 million.

The preliminary unaudited net profit of $ 44.5 million after taxes in the 12 months to August 2 is a 32 percent decrease in your profit in fiscal 2019. You would have had a loss of $ 4.3 million without financial support from the government.

The group posted sales revenue of $ 3.2 billion for the year, 3.3 percent more than the prior year. About $ 1.5 billion of that was generated in the second half of the year, with sales increasing 4.1 percent in the period.

The Warehouse said that “given the loss before the wage subsidy, as well as the continuing uncertainty surrounding economic activity and business prospects,” its directors had decided not to pay dividends.

“Subject to trading during the critical period of the second quarter and any additional alert level restrictions and adverse economic impacts from Covid-19, the group expects to pay dividends again in accordance with its dividend policy for fiscal year 21.” it said in a statement from NZX.

It posted an unaudited adjusted net profit after tax of $ 80.7 million, including adjustments for unusual items of $ 36.3 million, up 9 percent from last year.

The group will publish its audited results on October 15.

Last week, The Warehouse Group defended the firing of hundreds of workers just months after it took the wage subsidy.

It was criticized by the leaders of the two main political parties during a leaders’ debate, but justified the layoffs, saying its sales had plummeted 67% or $ 265 million during the national shutdown period.

The group told the Herald that the government subsidy had covered only 50 percent of its wage bill during that time.

Its annual salary expense for 11,000 employees is approximately $ 525 million a year.

It is not known exactly how many employees the group has laid off since the start of the pandemic, as the process is still “ongoing.” However, it had previously said that the proposed cuts would affect up to 750 jobs, the equivalent of 320 full-time positions, at 92 of its stores.

It maintains its claims that the cuts had been “planned for some time” prior to Covid-19.

MORE TO COME.