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Peter Birtles to leave early after widespread underpayment is revealed

Super Retail Group on Tuesday announced it has set aside $43 million to repay staff after identifying widespread underpayment of overtime and allowances for retail managers.

This is the second time in a year the business has had to repay staff. In August 2018, it disclosed it had underpaid certain members of its Set Up team, leading to a comprehensive review of the employment arrangements across its business, which revealed the wider underpayment problem.

The news has hastened outgoing chief executive Peter Birtles’ departure from the company. Originally due to step down on 31 March, he is now leaving the company next week on 20 February, citing the severity of the mistake.

“We are very disappointed that we have let these team members down and not met our standards, and we apologise to each person affected unreservedly,” Birtles said.

“We are carefully remediating this situation. We have amended our contracts for managers to ensure their salaries appropriately remunerate them for overtime and allowances.”

Growth over the half year

Super Retail Group reported EBITDA of $166.2 million in the first half of FY19, an 11.3 per cent increase compared to the previous corresponding period. The company said this was driven by solid sales growth, a focus on maximising cash gross profit and controlling operating costs across its auto, outdoor and sports segments.

Total sales for the period reached $1.4 billion, an increase of 6 per cent over the same period last year.

“Growth in our markets [is] being driven by customers shopping through digital channels and we were pleased to maintain strong growth in our online sales as we leveraged the replatforming of all our websites,” Birtles said.

The group’s auto segment saw an EBIT growth of 2.5 per cent to $57.1 million, with online sales increasing 23 per cent. E-commerce now represents 6 per cent of category sales.

The outdoor retailing segment, made up of the BCF, Macpac and Rays businesses, saw $22.9 million in EBIT, a 39.6 per cent increase over the previous period.

Gross margin in the BCF business was impacted by active competition in the camping and fishing category, but the brand has positioned itself for market share growth.

Macpac saw “particularly strong” growth in Australia, as a result of an increased brand presence in the region, while online sales grew 24 per cent. E-commerce now represents 10 per cent of the brand’s total sales.

Rays delivered an EBIT loss of $1.2 million, with its nine stores being transitioned from Rays into Macpac Adventure Hub stores.

The group’s sports segment EBIT reached $54.4 million, a 5.2 per cent increase, while segment sales grew 4 per cent to $523.9 million.

Sales continue to lift in second half

Super Retail Group said it has had a strong start to the second half of FY19, with all three of the group’s largest brands delivering positive sales growth over the first six weeks.

Supercheap Auto has seen like-for-like sales growth reach 4 per cent, while BCF and Rebel have delivered 8 per cent growth.

Macpac has seen a 2 per cent decrease in like-for-like sales so far, as a result of a “significant clearance program in the prior comparative period.”

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