Super Retail adds $8 million to underpayment bill

Super Retail Group’s staff underpayment problem continues to compound, with the company adding a further $8 million to its estimated cost of repaying staff.

The total now sits at $61.2 million up from the $53.2 million estimated last year.

This increase occurred due to the business identifying additional team members impacted by overtime underpayments, as well as an overestimate of retail manager and set-up team member payments required. 

And while the retail group has yet to see a significant impact from the coronavirus outbreak due to high inventory levels, a significant proportion of its goods are sourced from China through two factories in Wuhan, China.

According to Super Retail chief executive Anthony Heraghty, the situation is largely unknown and is something the business is monitoring very carefully.

Super Retail joins a particularly busy week for retailers announcing they have underpaid staff, with both Coles and Target having announced underpayments of $20 million and $9 million respectively. 

And like Coles, the announcement clouds an otherwise strong half-year result, with group like-for-like sales up 1.7 per cent despite the impact of bushfires and drought across the half.

Additionally, while online grew 22 per cent to account for 8 per cent of total sales, 96 per cent of group sales involved an in-store touchpoint with customers – allowing the group to leverage the scale of its Supercheap Auto, Rebel, BCF and Macpac businesses’ physical footprints.

Heraghty told investors the result was “incredible” considering the challenges retail faced over the period, particularly the impact on consumers from the bushfires and coronavirus. 

Supercheap Auto saw like-for-like sales growth of 2.4 per cent driven by a growth in average transaction value, with strong growth seen in the auto maintenance category. 

Active Club Plus memberships increased 13 per cent to 1.7 million and now represent 40 per cent of Supercheap Auto sales. Members also have an average NPS of 63 per cent, up from 60 per cent on the prior corresponding period.

“In simple terms we have more customers than last year and they’re happier. In retail parlance that’s a good result,” Heraghty said. 

Sports retailer Rebel grew like-for-like sales 3.3 per cent with footwear and hardgoods performing strongly. 

Australia’s disastrous bushfire season had the largest impact on Super Retail’s outdoor sector, with both BCF and Macpac suffering like-for-like sales decreases of 0.5 per cent and 9.5 per cent respectively. 

More than 50 BCF stores were directly impacted by bushfire while the drought led to a downturn in customer demand for outdoor products, especially in the camping category. 

Super Retail chief financial officer David Burns called the Macpac results “disappointing”, with NSW and Victoria seeing a sizable impact from the bushfires, while like-for-like sales in New Zealand also fell 2.9 per cent. 

The businesses have seen a stronger start to the second half, however, with Macpac’s small-format stores delivering like-for-like sales improvement, while Super Retail looks to the Easter period to drive interest in BCF.

Heraghty said Super Cheap Auto and Rebel have started strong as well, with like-for-like sales growth of 3.1 and 5.8 per cent respectively. 

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