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Retailers are faced with a moral dilemma over whether to pay back the government wage subsidy, and more and more large stores are choosing to pay back millions rather than face public backlash.
The wage subsidy scheme was announced in early March to ensure that people did not lose their jobs during the Covid-19 pandemic.
During the life of the plan, just over 750,000 companies claimed Covid-19 wage subsidies worth $ 14 billion.
However, the wage subsidy has been widely criticized for being too lenient, considering New Zealand’s economic recovery after the shutdown.
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Retail trade has largely recovered, with GDP growing 14 percent in the September quarter.
Figures from the Ministry of Social Development (MSD) for May show that 25 percent of all wage subsidy payments went to companies with at least 100 employees. Of the $ 14 billion paid through the scheme, that’s about $ 3.5 billion to large companies.
Christel Yardley / Stuff
Several of New Zealand’s largest retailers have reported profits, despite the Covid-19 crisis, so which ones are paying back the wage subsidy?
Since August, several large companies, particularly retailers, have reported significant gains despite the pandemic.
Increasingly, these companies have been asked to repay the wage subsidy.
Prime Minister Jacinda Ardern and opposition leader Judith Collins said in a leaders’ debate that it was immoral for companies that posted earnings and paid dividends to have clung to the wage subsidy.
So which large retailers repaid the wage subsidy when shoppers returned to stores in greater numbers than expected?
Briscoe Group
Briscoe Group, which includes Rebel Sport and Briscoes, received $ 11.5 million in salary subsidies for its 2000 staff.
Despite the time spent at alert level 4, no member of the retail group’s staff was fired and none of the stores were permanently closed.
But Briscoe Group was criticized when it went on to pay a dividend to shareholders, despite receiving the subsidy.
It posted an after-tax profit of $ 28 million for the six months through July 30, compared to $ 28.4 million for the first six months of the prior year, a decrease of just 1.3%.
In October, Briscoe announced that it would return the grant, and managing director Rod Duke said it was the right thing to do.
Subsequently, the company announced a special dividend of 6 cents.
The Warehouse Group
The Warehouse Group received $ 67.7 million from the plan for 11,000 employees.
The group, which operates The Warehouse, Warehouse Stationery, Noel Leeming and Torpedo7, faced criticism from the unions and Prime Minister Jacinda Ardern, who said she was “angry” at the company for continuing the restructuring and layoffs while obtaining the subsidy. .
Earnings for the current semester are expected to exceed $ 70 million, compared to $ 46.2 million a year earlier.
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The Warehouse Group says it will refund its $ 67.7 million wage subsidy.
On Monday, the company announced that it would repay the subsidy.
Harvey Norman
Australia-based retailer Harvey Norman received $ 12.7 million in wage subsidy for 1,850 employees.
At the same time, Harvey Norman reported a year-on-year increase in earnings of nearly 20 percent and an increase in New Zealand sales of more than 28 percent.
For July and August, earnings were up 185.8 percent, Australian shareholders were informed.
The company has not returned the wage subsidy.
Hallenstein Glasson
The owner of the Hallenstein Brothers and Glassons clothing chains received $ 5.18 million in wage subsidies for 866 employees.
In Australia, the company also agreed to payments from Jobseeker, totaling $ 4.98 million.
Hallenstein Glasson posted a net profit after tax of $ 27.8 million in September, down 4.3 percent, but in line with the top of its forecast range published last month.
Joseph Johnson / Stuff
Hallenstein Glasson received $ 5.18 million in wage subsidies and reported a net profit of $ 27.8 million after taxes.
The fast fashion retailer saw sales rebound after a big drop during the Alert Level 4 lockdown, but said it had no plans to repay the wage subsidies it received.
Michael Hill
Jeweler Michael Hill received $ 2.25 million in salary subsidy for 326 employees, plus $ 1.32 million in salary subsidy extension for 287 employees, a total of $ 3.58 million.
In September, the company reported a net profit after tax of A $ 3.05 million (NZ $ 3.25 million), down 81.5 percent from the previous year.
Michael Hill closed three underperforming stores in New Zealand, five in Australia and one in Canada in May.
In October, the company said it was “cautiously optimistic” heading into its key Christmas trading period.
The jewelry retail chain told shareholders that its profit margin increased by 100 to 200 basis points in its first quarter through Sept. 27, compared to the same period a year earlier, as online sales increased by 129 percent.
Michael Hill International has been contacted for comment on the wage subsidy.
Kathmandu
The Kathmandu outdoor retailer received $ 3.88 million in salary subsidy for 689 employees and $ 2.32 million in salary subsidy extension for 567 employees, a total of $ 6.2 million.
Sales plummeted $ 135 million in Kathmandu’s retail and wholesale business and the company reported a profit of $ 8.9 million in the most recent financial year, down from $ 57.6 million last year.
Kathmandu has been contacted for comment on whether it would consider reimbursing the subsidy.
Farmers
The farmers’ parent company, James Pascoe Group, received $ 2.5 million in salary subsidy for 449 employees, before claiming another $ 464,784 for 443 in salary extension.
The company, owned by Anne and David Norman, is not listed on the NZX and does not publish its annual results. It is unknown how much profit the company made in the last year.
