21 Dec 2020

The Warehouse Group to repay $68m wage subsidy

5:50 pm on 21 December 2020

The Warehouse Group will repay its $68 million wage subsidy.

Warehouse on Blenheim road in Christchurch

Photo: RNZ / Nate McKinnon

The group, which includes retailers The Warehouse, Warehouse Stationery, Noel Leeming and Torpedo 7, took the money back in April as the lockdown slashed earnings.

However, the group came under fire from unions, commentators and some politicians including the Prime Minister for taking the money, proceeding to lay off staff then reporting a full year profit of $44.5m.

Without the subsidy the company would have made a loss of just over $4m.

At the time, the company's chief Nick Grayston defended the moves and said the company had been unfairly targeted.

In an update to the stock exchange this afternoon, he said the company was now in a position to pay back the money due to strong trading in the lead up to Christmas.

"Due to this sustained sales momentum, [profit after tax] for the half year is expected to exceed $70m, which is pre impact of repayment of wage subsidy, compared to $46.2m in [2020 financial year].

"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. '

First quarter sales for the group increased by 6.3 percent and now stand up 6.6 percent year-to-date compared to the same period last year.

Grayston said the conditions were better than expected.

"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.

"Stock levels remain satisfactory for the summer and back to school period, however due to delays in international shipping and continuing increased demand, there may be some delays to delivery for some of our winter products. We will continue to monitor this situation closely and make operational adjustments as and when required."

Full year guidance would be issued when the first-half financial results are released in March.

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