Wesfarmers has slashed its payout after admitting to $24 million in staff underpayments – including $9 million at Target – in a first-half result otherwise buoyed by the retail performance of Bunnings, Kmart and Officeworks.
The firm on Wednesday identified in its results for the six months to December 31 a “payroll remediation” of $15 million for its industrial and safety division, as well as the $9 million Target figure.
The company said it was otherwise pleased with improved comparative sales growth at Bunnings, Kmart and Officeworks, though Target recorded a worse-than-expected $67 million sales slump.
Wesfarmers’ former stablemate Coles on Tuesday said it was expecting a $20 million hit after managers at its supermarkets and liquor division were underpaid over the past six years.
Wesfarmers also admitted in November last year it had discovered superannuation underpayments at Bunnings, with that hit reaching $6.1 million.
The company gave little extra detail about the latest underpayments in Wednesday’s results.
“Following the payroll errors previously identified, Wesfarmers’ businesses have conducted extensive reviews of their respective payroll systems and processes,” the company said in its release to the ASX.
“As a result of these reviews, some additional payroll errors have been identified.”
Factoring in the impact of the new leasing standards and discontinued operations, Wesfarmers’ first half statutory net profit dropped to $1.21 billion from $4.54 billion a year ago when the company’s coffers were flush after the demerger with Coles and divestment of Bengalla.
The company’s interim dividend has been shaved to 75 cents per share, fully franked, down from a fully franked $1 interim dividend a year ago, when a $1 special dividend was also paid.
Wesfarmers’ net profit from continuing operations was $1.14 billion for the half – up 6.0 per cent from $1.08 billion a year ago when new lease standards are stripped out.
Earnings from continuing operations – not accounting for interest on lease liabilities – fell 0.5 per cent to $1.64 billion compared with a year ago.
Earnings across the Kmart Group, which includes Target, as well as the Catch Group from August 12, fell 9.9 per cent to $345 million before leasing standards.
Kmart’s 5.5 per cent comparable sales growth swung from a 0.6 per cent decline a year ago, with revenue at the discount department store up $241 million or 7.6 per cent to $4.99 billion.
Target’s comparable sales went the other way, falling 2.3 per cent compared with 0.5 per cent growth a year ago.
Pre-leasing standards, Bunnings accelerated to 4.7 per cent same store sales growth from 4.0 per cent a year ago.
Wesfarmers also announced on Tuesday it had sold a 4.9 per cent stake in Coles for $1.05 billion.
The company retains a 10.1 per cent stake in the supermarket chain and the right to nominate a director to the Coles board.
AAP
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